Corporate Performance and Firm Perception: The British Experience

Previous academic research has presented a theoretical basis for a relationship between attributes of a firm's reputation and its financial performance. For the United States, researchers have analyzed the correspondence between market and accounting based measures of U.S. firm performance and external evaluators' perceptions of the qualitative attributes of U.S. firms. In this study, expert surveys on the qualitative performance of British firms conducted by the British publication, The Economist, which are similar in content to surveys conducted by Fortune magazine for U.S. firms, are used to determine the correspondence between qualitative and quantitative measures of British firms' performance. Results indicate that differences may exist between U.S. and Britain in the use qualitative survey data on a firm's strategic attributes as a forecast of a firm's future quantitative performance measures. Results also indicate that for small firms, certain qualitative factors (e.g., capacity to innovate) may be of greater importance in forecasting accounting and security market returns.