Corporate Communication and Reputation: An In-Depth Analysis into Impact, Practices, and Reputational Aspects Tied to M&A Announcements

Corporate communications are central to corporate reputation. Stock prices are driven more by perceptions than fundamental values (Fombrun, 1990, 1996) and corporate communication practices are key in shaping investors’ perceptions. While intangible assets of firms are studied widely in the strategy field, researchers have recently shifted their attention on a more narrow set of intangible assets called “social approval assets” (Pfarrer, Pollock, & Rindova, 2010) which include reputation(s) and celebrity statuses of organizations. Social approval assets derive their value from favorable collective perceptions (Pfarrer et al., 2010). This research proposes that corporate communications help shape collective perceptions and therefore contribute to building and/or sustaining social approval assets within organizations. The underlying assumptions of this research are the following: i) corporate communications can and do influence market prices; ii) different corporate communication practices are associated with different levels of impact on organizational performance; and iii) firm specific and group specific reputation have an observable effect on communications outcomes.