Financial Performance and Sustainable Corporate Reputation: Empirical Evidence from the Airline Business

Abstract

A good corporate reputation is essential, and it is becoming increasingly relevant for both companies and stakeholders. In this context, Fortune magazine publishes an annual ranking of corporate reputation, therefore listing the most admired companies in the world. Since corporate reputation is considered an intangible asset, it is difficult for competing firms to create similar products or services in the long run. Numerous researchers have concluded that financial performance is strongly connected to corporate reputation. The purpose of this study was to elicit the importance of financial performance in determining an adequate sustainable level of corporate reputation. Using financial indicators and the VIKOR method for a sample of airline companies, we compared the rankings generated by the VIKOR method to the ones published by Fortune. Empirical results showed that when introducing additional financial indicators in the VIKOR method, the VIKOR ranking tends to become similar to the Fortune one. When we introduced 10 financial indicators in the VIKOR method, we obtained similar rankings in 8 of the 10 years of analysis. Our study addresses stakeholders who follow corporate reputation details and may assist them in formulating investment decisions by relying on financial results.