CorpComms Magazine

The corporate reputation of the top 350 companies listed on the London Stock Exchange is worth in excess of £460 billion, new research revealed today.

Such is the value of the corporate reputation of these companies that, if it were a country, it would be bigger than Poland, and the 21st most valuable country in the world.

Corporate reputation now accounts for about 30 per cent of the market capitalisation, or shareholder value, of FTSE 350 companies, up three percentage points over the past year, although it is demonstrably more valuable to FTSE 100 companies.

The inaugural Reputation Dividend report, which has been launched by Echo Research in conjunction with Bestra Brand Consultants, found that corporate reputation comprises an average 32 per cent of shareholder value for FTSE 100 companies but just 14 per cent for FTSE 250 companies.

The ten most valuable corporate reputations represent, on average, 48 per cent of shareholder value, while in the case of both Royal Dutch Shell and Unilever corporate reputation represents more than half the value of their businesses.

The study found that the top ten most valuable corporate reputations were worth a combined £228 billion, marginally less than the gross domestic product of Nigeria.

By contrast, the ten least effective reputations eroded an average of 10.7 per cent from the market capitalisation of their associated companies, or roughly £720 million in shareholder value.

Reputational issues at troubled directories group Yell Group, for example, eroded 44.9 per cent of shareholder value while 17.8 per cent was wiped from sportswear retailer Sports Direct International, which recently successfully refinanced its banking arrangements and announced the end of an ongoing investigation by the Serious Fraud Office.

Surprisingly, BP, which last year suffered the Deepwater Horizon disaster, is not among the ten companies with the least effective reputations.

Sandra Macleod, chief executive of Echo Research, said: 'Metrics abound but there is nothing that offers any insight into the immediate economic impact of corporate reputation. We believe this new study provides the missing link, connecting reputation drivers to shareholder value.'

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