The signs are propitious for the beginnings of a return to some normality in the markets as the ‘hard’ evidence of financial indicators such as companies’ earnings forecasts, returns on capital and so on start to reassert their impact. The influence of corporate reputation however, remains well above the long-run average as high performance company profiles continue to hold attention. Indeed, as of August individual corporate reputations across the S&P 500 as a whole, are providing sufficient investor confidence to directly account for 29.5% of the gross market capitalisation; more than $12 trillion of shareholder value.
Most companies’ reputations, but by no means all, are net positive contributors to shareholder value with the way being led by Apple which returned to the top spot after a year away with a Reputation Contribution – proportion of market cap accounted for by reputation inspired confidence – of close to 57%. Elsewhere, the biggest gainers among the leaders were Nike, Walmart and Target. These three ‘pandemic winners’ booked Reputation Contribution increases averaging +6 percentage points to take positions 5 to 7 in the overall top 10. Conversely, the biggest losers from the 2020 top ten Walt Disney and Deere albeit with Reputation Contributions that declined by just 2 percentage points.
Critically, the winners and losers in the reputation asset stakes in 2021 were defined by how well their reputations were matched to changing investor interests. Key to growth was an emphasis on perceptions of people management i.e. appeal to talent and use of corporate assets and away from the likes of CSR/ESG and global competitiveness. Looking to the end of the year and into 2022 and the evidence points to more movement as investor attention focuses on the likes of innovation and long-term value potential again as we move into the next phase of the cycle.