The Face of the Firm: The Influence of CEOs on Corporate Reputation

Abstract

It is widely assumed that CEOs shape how people view firms, but the question of how these leaders influence corporate reputations has received little theoretical or empirical attention.This study addresses two core questions in this vein: to what degree do leaders really matter for firm reputation, and which leaders affect their firm's reputation? We develop theory explaining how and why leaders should enter into evaluations of the firms that they lead. More specifically, we propose that CEOs will affect corporate reputations depending on leader prominence and on perceptions of leader quality. We test these hypotheses by examining how CEOs' media coverage, industry awards, and outsider standing affect the reputations of their firms. Findings indicate that highly-regarded CEOs enhance their firm's reputations, sometimes substantially, and CEOs who receive negative press coverage damage their firms' reputations. However, CEO prominence alone was not associated with higher firm reputation. We discuss implications for research on leaders and corporate reputations.

Executives' excess compensation, legitimacy, and environmental information disclosure in Chinese heavily polluting companies: The moderating role of media pressure

“…In the capital market, the media plays a key intermediary role in information disclosure, pooling, and diffusion, which significantly reduces the cost of information collection and reflects its governance functions (Liu, McConnell, & Xu, ). Prior studies show that media reports not only ease the information asymmetry between firms and stakeholders (Aerts & Cormier, ) but also affect the reputation of executives (Love et al, ).…”

“…The affirmation that the media plays an important role in the capital market has been widely accepted (Dyck, Volchkova, & Zingales, ). Media coverage is considered to not only ease the information asymmetry between firms and stakeholders (Aerts & Cormier, ) but also affect the reputation of executives (Love, Lim, & Bednar, ). Existing studies corroborate that media attention helps constrain executives' abuses of authority (Dyck et al, ).…”

Does CEO media exposure affect corporate social responsibility?

“…given the tendency to believe that CEOs personify the values and norms of companies (Fisman et al, 2013;Veltrop et al, 2018), in general, it is suggested that a greater media presence is associated with closer identification with the company (Love et al, 2017). Likewise, it is also argued that CEO media exposure is positively related to a longer time horizon in decision making (Hirshleifer et al, 2012;Liu et al, 2016).…”

“…Second, other proxies for CEO commitment or CEO power could be considered, for example, CEO duality, CEO ownership, or whether CEO is a member of the family who holds majority stakes of the firm. Finally, the measure of CEO media exposure could be further developed by incorporating a consideration of the tone of CEO appearances in the press (Love et al, ), as the media agenda theory indicates that negative news are not symmetrical to the positive or neutral news (Kölbel, Busch, & Jancso, ; Rozin & Royzman, ). In this way, it would be possible to analyse the influence of positive and negative press mentions of the CEO to isolate the influence of each category on CSR.…”

Reputation spillover effects from grant‐providing institutions

“…When prominent partners, both internal and external, decide to collaborate with or support an organization, their reputation can reflect on the focal organization (Houston, 2003;Yu & Lester, 2008;Zavyalova, Pfarrer, Reger, & Shapiro, 2012). For example, prestigious internal members such as Chief Executive Officers can influence how stakeholders perceive the organization as a whole (Love, Lim, & Bednar, 2017). Similarly, external partners can shape the organization's reputation, and the choice of partners can strongly influence how stakeholders perceive the quality of the focal organization (Benjamin & Podolny, 1999).…”