The relationship between corporate reputation and risk in financial intermediaries

Corporate reputation is a strategic resource for businesses and, in particular, for financial intermediaries, whose intermediation activity is based on trust and credibility. Many contributions in literature have attempted to study the relationship between corporate reputation and economic-financial performance, reaching contrasting conclusions. Few authors have, on the other hand, studied the possible link between corporate reputation and business risk. This paper investigates the relationship between corporate reputation (measured by the America's Most Admired Companies index) and non-diversifiable risk on a sample of listed financial intermediaries in the period 2000-2009. The analysis demonstrates that a good reputation contributes to reducing the systematic risk.