Download the Full Report (PDF): Do Actions Speak Louder Than Words?
Download the Press Release: MAHA Global and the Institute for Public Relations Unveil Research Findings on the Financial Impact of Corporate Reputation
MAHA Global and the Institute for Public Relations conducted research on the relationship between financial performance and reputation.
Using MAHA’s Darwin Intelligence platform, 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: environmental impact, governance, how organizations treat their employees, community impact, commitment to diversity, customer satisfaction and financial performance, including market cap and total sales. Results found that business performance is more strongly correlated with better behavior than public perception.
Figure 1:
Overall, companies with higher scores on the reality dimension or that behave better on reputation attributes performed better financially. This result was true even after variation due to industry was controlled (total sales: r =0.11, P<0.001; market cap: r =0.06, P=0.01). By contrast, financial performance did not consistently improve with higher perception scores. In fact, the slope of the linear relationships between both sales and market cap were slightly negative (~ -0.05). A non-linear fit suggests that maximal financial returns were associated with intermediate perception values (See Figure 1). Therefore, actions do speak louder than words.
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.
About the Institute for Public Relations (IPR):
The Institute for Public Relations is an independent, nonprofit research foundation dedicated to fostering greater use of research and research-based knowledge in corporate communication and the public relations practice. IPR is dedicated to the science beneath the art of public relations.™ IPR provides timely insights and applied intelligence that professionals can put to immediate use. All research, including a weekly research letter, is available for free at instituteforpr.org.
About MAHA Global:
MAHA Global is a leading evolutionary AI SaaS company that helps companies track and predict corporate reputation and related business outcomes. As a Public Benefit Corporation, MAHA is devoted to helping organizations positively transform and build more trust with their stakeholders. For additional information about the company, please visit https://maha.global/
Media Contact:
Brittany Higginbotham
Communications & Outreach Manager
brittany@instituteforpr.org
352-392-0280
