Do Their Reputations Precede Them? Corporate Reputation and Stock Market Reaction in the Context of Sector and Market Maturity

Our study extends the previous literature by examining whether the stock market’s maturity and the sector in which a company operates affect the relationship between an improvement in the corporate reputation and its stock returns. This event-study research is based on data from developed and emerging stock markets: the NYSE (US) and the WSE (Poland). The improvement in corporate reputation is proxied by its inclusion in a reputational index—the DJSI in the US and the RESPECT Index in Poland—from 2009 to 2019. Our findings suggest that in the emerging Polish market, the significant reaction to inclusion in the index persists even when the sectoral circumstances are considered. Contrarily, in the developed US market, a strong positive effect of inclusion disappears in the sectoral context. Hence, significant returns may not be driven by the inclusion in a reputational index but result from other events that affect the particular sector