The financial impact of corporate reputation: New IPR research reveals the true cost of brand-image shortfalls—both real and perceived

by | Apr 29, 2024 | Public Relations

In an age when consumers have little trust in brands and marketing communications, your company’s reputation is your most precious asset—and not just real reputation, but perceived reputation as well. And it doesn’t matter whether that reputation is sullied by rumors of unethical corporate behavior or more direct consumer-impacting issues like poor data management or consumer privacy shortfalls—new Institute for Public Relations research finds that you’ll literally pay the price right out of your revenue.

The PR research nonprofits’s latest report, Do Actions Speak Louder Than Words?, in partnership with AI SaaS firm MAHA Global, explores the activities necessary to keep your reputation in fighting shape—revealing that companies walking the fine line of transparency and following through on their commitments see better financial returns.

Using proprietary MAHA research, data were gathered on 511 publicly traded companies, spanning 16 industries worldwide, including both public perception data (e.g., what is written about them in news and social media outlets) and corporate behavioral data (what companies are actually doing—stemming from disclosed actions an organization takes that impact their various stakeholders) across seven categories of corporate reputation: 

corporate reputation

Results found that business performance is more strongly correlated with better behavior than public perception

“This study underscores the need for corporations to embrace authenticity and action as foundational pillars of reputation management,” said the study’s author Ryan Calsbeek, Ph.D., professor of biological sciences at Dartmouth College and chief science officer at MAHA, in a news release. “In a world where so much information is available to the public, companies can no longer make commitments without follow-through.”

corporate reputation

The dilemma of misunderstood companies

Another important result from this study shows that certain industries score lower on public perception metrics despite having a strong track record of good behavior. These “misunderstood companies” may have stakeholders who are unaware of the good work organizations are doing in key reputation areas. 

Public perception of companies in the biotech/healthcare industry, for example, registers among the lowest of any industry, and yet the industry scores better than most others in terms of its actual behavior (e.g., its leadership effectiveness, community service, and the way the industry values diversity). The gaps between perception and reality highlight communications opportunities for companies that are performing well in this space.

corporate reputation

“Identifying the gaps between behavior and perception is important for communication functions to help better understand how actions impact stakeholder perception, reputational risk, and financial performance,” said Tina McCorkindale, Ph.D., president and CEO of IPR, in the release. “This offers an opportunity for communication teams to be more strategic in how they communicate with their internal and external stakeholders.”

Read the full study here.

Richard Carufel
Richard Carufel is editor of Bulldog Reporter and the Daily ’Dog, one of the web’s leading sources of PR and marketing communications news and opinions. He has been reporting on the PR and communications industry for over 17 years, and has interviewed hundreds of journalists and PR industry leaders. Reach him at richard.carufel@bulldogreporter.com; @BulldogReporter


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