Corporate Reputation And Its Evaluation

Corporate reputation is one of the most important intangible assets of the company. The theory of corporate competition based on the view of resources believes that intangible assets are the key of competitive advantage. However, according to the present accountant rule, most intangible assets such as corporate reputation can not be brought into accountant system. On the one hand, managers can not manage the value of corporate reputation in time when it changes. One the other hand, corporate value can not be integrated evaluated. So it is urgent to develop a proper method to evaluate corporate reputation and strengthen its value management to ensue its achievement of corporate competition.In the paper, we first introduce the basal theory of corporate reputation and discuss the evaluation of corporate reputation based on its' transaction theory. And then we analyze the basal methods of intangible assets evaluation: market approach, cost approach and income approach. We believe that cost approach is the basis of corporate reputation evaluation, but it is limited as the complexity of corporate reputation. Market approach is not appropriate to use. Income approach could reasonably reflect the value of corporate reputation, but the difficulty is how to determine three important parameters: anticipative income, discount rate and anticipative time.Then we decide to use income approach to evaluate corporate reputation and discuss how to determine anticipative income, discount rate and anticipative time primarily. By using a case we show how to evaluate corporate reputation in practice. Firstly, we build hiberarchy division model of corporate reputation according to three driven factors: return, growth and risk, using fractional scale to build analytic hierarchy judgment matrix, and construct corporate reputation income model to measure its current value, then using moving average method and regression method to forecast the future income of corporate reputation. Secondly, the discount rate is computed by WACC or the average industry rate of return. The third, on the normal condition, we consider the anticipative time of corporate reputation is infinity.Additionally, we give some advices to improve the value of corporate reputation based on the analysis of corporate governance and corporate reputation. We hope it would be helpful to improve the value of corporate reputation.Because researches on this field are infrequent up to now, we have enriched the content of corporate reputation theory by evaluating corporate reputation using income approach. Another innovation of the paper is that we analyze corporate governance and corporate reputation and give advices to improve the value of corporate reputation from corporate governance aspect. We hope our research could contribute to further researches on corporate reputation evaluation.