The Market Valuation of Corporate Reputation

We provide evidence that corporate reputation has value relevance, as measured by its ability to explain the firm's market value of equity at the end of the fiscal period. Corporate reputation is assessed using a summary measure from the Fortune survey of 'America's most admired companies.' The Fortune measure serves as a proxy for intangible assets, such as internally generated goodwill, customer service, and intellectual capital. We demonstrate that this summary measure of non-financial information adds to market value, even after controlling for the financial performance 'halo' effects on the Fortune ratings.