CORPORATE GOVERNANCE AND CORPORATE REPUTATION: EVIDENCE FROM AMERICA’S MOST ADMIRED COMPANIES OF 2006

Abstract

Prior research suggests strong corporate governance enhances firm performance, and strong firm performance leads to high corporate reputation. Using a sample of highly reputable firms from Fortune’s 2006 America’s Most Admired Companies list and a corresponding matched sample of firms, we examine the association between corporate governance (as of February 2005) and subsequent corporate reputation ratings (as of March 2006). Results indicate a positive and significant relationship between corporate governance and subsequent reputation ratings. Our findings suggest that firms with stronger corporate governance mechanisms will receive higher reputation ratings from the public.