Relationship between Corporate Reputation and Stock Market Performance: The Role of Firm Size and Financial Performance

Abstract

This paper analyzes the correlation between corporate reputation and stock market performance of Pakistani listed companies between 2014 to 2024 in Pakistan Stock Exchange. Secondary data were collected using a quantitative panel data research design and obtained data through annual reports and financial databases of 35 company-years listed in total; 385 observations were gathered. The measurement of corporate reputation was done using a composite index that included both corporate social responsibility disclosure scores and brand rankings whereas operationalization of stock market performance was achieved by using annual stock returns and the natural logarithm of market capitalization. Control variables were firm size and the return on equity. Descriptive data analysis, correlation analysis and panel regression methods such as pooled ordinary least squares, fixed and random-effects regressions were used to analyze data. The Hausman test indicated that the fixed-effects estimator was appropriate to both the dependent variable models. The results indicate that the corporate reputation has a strong positive impact on stock returns and market capitalization, and firm size and return on equity also indicate strong positive correlations with stock market performance results. The paper adds to the small body of empirical evidence on reputation- performance relationships in the new capital market environment and has practical implications on managers intending to develop reputation as a strategic financial resource.