Corporate Reputation and Stock Liquidity: the US case

• Autor(es): Domingos, Fabiana ; Febra, Lígia ; Costa, Magali
• Data: 2022
• Origem: European Journal of Applied Business and Management
• Tipo de Documento: Artigo científico
• Idioma: Inglês

Descrição

Purpose: The purpose of this paper is to analyze if there is a positive relationship between corporate reputation communication through media ranking and stock liquidity.Methodology: A model based on firms' financial market data was estimated, through a panel data analysis that included 18,444 observations, from a full sample of 348 firms listed on the New York Stock Exchange (NYSE), half of which were listed in the 2015 ranking of Fortune's World’s Most Admired Companies (WMAC).Findings: The results show that there is a positive relationship between corporate reputation communication and the stocks liquidity, since firms listed in the Fortune Ranking have higher liquidity than firms that are not listed, and firms classified with a high rank have higher liquidity than firms classified with a low rank.Originality: Stock liquidity is important to obtain financing resources to invest in profitable projects that increase the firm value. On the other hand, it is recognized by the literature that corporate reputation has a strong influence on firm performance. To the best of our knowledge, this is the first study that addresses the analysis of the relationship between corporate reputation and stock liquidity. Therefore, this study may provide important insights into the firms’ management, for the investor’s decisions and the government policies. Capital markets react ever more to market stimuli, including investor and consumer perceptions, which may influence the stock trade level. The identification of additional drivers of a firm’s stock liquidity improves decision-making.Keywords: Corporate Reputation, Liquidity, Amihud Illiquidity, Market Illiquidity.