The Research On The Impacts Of Reputation On Corporate Value Of Commercial Bank

With the reform of banks keeping going and the changes happened in internationaland domestic financial environment, operating a commercial bank is more challenging.The traditional ways of competition like products and services competition has beenunable to bring new growth to the commercial banks. Major commercial banks inChina are now looking for specialized and differentiated operating ways, and thestrong vitality of soft power is being paid much more attention. During the financialcrisis, a lot of famous Banks in America suffered heavy losses and their stock priceplummeted, however, just three years after the peak of the crisis, these banks haverecovered quickly and start a new rise. In contrast, Commercial banks in China stillhaven·t got a new breakthrough and their stock price is still low. Because of its hugeimpact on long-term gains as well as the capability of anti-crisis and rapid recovery oncommercial banks, reputation is very important.This paper has elaborated the connotation of the reputation of commercial banksbased on the research of reputation of commercial banks, corporate value ofcommercial banks and the impact of a company·s reputation. The reputation ofcommercial bank has the features of high degree of importance, complex formingfactors and the reputational risk can transmits fast and make a wide range of hazards.Commercial bank’s reputation is build up under the condition of infinite times repeatgames. In order to pursue long-term benefits, commercial banks will initiatively meetthe demand of stakeholders and do cooperative behavior. The effect factors ofreputation of commercial banks are very complex. In this paper, through theoreticalanalysis on the impacts of reputation on corporate value of commercial banks, it isfound that the reputation mechanism is to arrange a "incentive compatibility" systemand to increase the chance of making contracts by reducing the information asymmetry,which create the reputation capital as the important invisible asset of commercial bank.As well, it is the reputation event that helps to strength the reputation capital. Besides,this paper uses the event study method to do the empirical analysis. The event choosesgo to The China Banking Association issued the award of the most social responsiblefinancial institutions·μ and The <Financial Times> announced the FT Global500·μ.On the basis of empirical analysis，the conclusions are the nature of the reputationevent impact the changing trend of corporate value and the openness of the reputation event impact the changing speed of corporate value. What·s more, the than-expecteddegree of the reputation event make the main impact on the value of commercial bank.And the policy recommendations are put forward as follows: create a favorableexternal environment， pay enough attention to the reputation management strategy,strengthen the internal basic reputation management and strengthen the scope ofreputation management.