Archive for November 1st, 2006

Reputation Loss

1st November
2006
written by Dr. Leslie Gaines-Ross


Bill Barnhart of the Chicago Tribune had an interesting article today. He cited one particular presentation by Jonathan Karpoff, a finance professor at the University of Washington’s School of Business. Karpoff was speaking about the relationship between business ethical conduct and share price at the Research in Security Prices conference.

Karpoff is reported as saying, “The loss of business reputation is by far the biggest penalty companies face when they are found to have cooked their books. But some judges of a company’s reputation are more important than others. Diminished reputation translates into lower sales and higher costs of doing business. By comparison, fines, lawsuit penalties and accounting adjustments to a company’s value in the wake of shenanigans were less important.”

As they say in fashion, reputation loss is the new black.

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