As the most important intangible assets of modern enterprises, company reputation is much more emphasized by management and the society nowadays. It is an irreplaceable competitive advantage and is of high scarcity, unique and value-added, serving as the core competitive power of a company when seeking for continuing development. Company reputation is closely related to corporate value. The work on how to utilize company reputation is one of the most important topics in abroad studies in the recent20years, and is also highly recognized in the industry. Currently, the related domestic studies are still in the exploring phase. No consensus has been reached in the industry related to the establishment and maintenance of corporate reputation as well as its effects on the rise of corporate value. The substance of company reputation has a function of stimulation and restriction of resource allocation, reflecting the long-term effectiveness on transactions among companies. This article discusses the connecting process and the manner how company reputation affects corporate value in the Chinese characteristic economy, based on samples of most respected enterprises and using the new institute economics theories. The article also incorporates with the actual practices by the Chinese listing companies to demonstrate and analyze whether listing company reputation helps in decreasing transactions costs, mitigating financing risks and costs and reaching the final target of rising corporate value. Facing the current background of restructuring of Chinese listing companies, in the meantime of enriching the assumptions and the factors of functionality of listing companies in developing countries, it also provides a theoretical guidance and experience evidence improving the corporate governance on listing company reputation and fully developing the function of automatically fulfilling contracts.The article starts from the summary and retrospective review of the theories in domestic and international studies of company reputation, explaining the general rules of how company reputation affecting corporate value. It then reasonably connects the relationship between company reputation and corporate value with the managerial and financial operations, combining the motivations of creation of corporate values in the classical financial management theories. Last, the article concludes that company reputation can obviously raise corporate value in Chinese market, after a comprehensive discussion of the effects on company value from the most significant factors, i.e. ownership nature, ownership structure and effectiveness of laws.The main contributions of this article are as followings:It mainly adopts approaches of normative research and empirical research, comparing the static analysis of the classical models of reputation with the dynamic analysis of the regulations environment. It incorporates the case study with large number of samples, analyzing the potential common problems affecting company reputation in our country through the detailed analysis of certain cases to prove the manner how company reputation affects corporate value. The article ultimately materially contributes to the research of relationship between company value and corporate value.In nearly all past domestic studies, proxy variables and dummy variables were adopted in measuring company value with no conclusion of the necessary aspects to directly define and characterize company value in our country step by step. The article reasonably determines the reputation index by compound factor analysis, providing a perspective that can be referenced by the future studies of company reputation.The past studies of the effects on corporate value from company reputation were quite negatively from inner aspects of companies, including product quality, customer relationship, and reputation of owners or punishment. This article, however, avoids such inner method and incorporates the company features with the external environment, and therefore upgrades the depth and width of the research. Besides, the analysis standing in the current actual background will make the article a good reference when stimulating policies nowadays.The main conclusions of analysis are:(1) the company’s reputation and integrating enterprise value creation mechanism;(2) the theory of new institutional economics helps to explain the present situation of our company’s reputation and role;(3) the company’s reputation can significantly improve the value of the enterprise;(4) the current institute environment will influence the company’s reputation mechanism.The possible innovations of the article are as followings: A much more in depth analysis perspective. In the general studies of company reputation creating corporate value, it is assumed that actions affecting company reputation will automatically relate to the daily managerial and financial operations. This article investigates in each process of the company finance, and proves that only through the manageable daily operations can achieve the ultimate growing of corporate value, which will stimulate companies to establish the reputation actively.A more complete research method. Based on a more reasonable research tool, the article starts from the literature review, to the logical reasoning, and to the set-up of the key variables and models, resulting in a more logical way and enriching the research method of the relationship between company reputation and corporate value in our country.A breakthrough over research topic. As was stated before, the contribution of the article is not limited to the inner aspect of companies when studying the relationship between company value and corporate relationship. The specific effects from external environment upon the financial value and market value are investigated deeply, which is very sensible for the problem solving in the practice.Due to the limits of the author in the related knowledge and research skills, there are still areas for improvement in this article, for example, the research of the variable index, samples of the creation of value from company value not enlarged to the entire listing companies and the restraints in the analysis skills etc. In addition, the article proposed four directions in the future studies in the last part:First, the measures concerning the reputation of the company needs to have reasonable design research and development, finally forms like the marketization process in China’s reputation index; Second, further to distinguish the equity structure of the company’s reputation mechanism research; Third, the cause of company’s reputation mechanism play can be further subdivided; Fourth, research methods and research tools will further updates.
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