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IA Finance Management Index

Corporate Reputation Index

Governance experts claim that reputation should be managed like any other asset underpinng enterprise value. Since Tuesday, November 1, 2011, they have been pointing to a reputation linked composite equity index as further evidence. The RepuStars® Variety Corporate Reputation Index, calculated by Dow Jones Indexes, is a quantitative strategy index reflecting the performance of up to 57 company stocks, selected algorithmically for reputation - driven value on the authority of Steel City Re® Corporate Reputation Index metrics. Download a copy of the index methodology.

Key Links:

  • Current REPUVAR quotes: Link Here
  • REPUSTARS Variety Corporate Reputation Index methodology: Download Here
  • Historical REPUVAR values - Dec 31, 2001 to Nov 11, 2011: Download Here
  • REPUSTARS tear sheet, description of constituents, Jan 2012: Download Here

Background

In late 2008, as Lehman Brothers was giving up the ghost, then-Federal Reserve Chairman Alan Greenspan observed that, “In a market system based on trust, reputation has a significant economic value.” The RepuStars Variety index shows exactly that. The RepuStars Variety price index increased 132.32% and the RepuStars Variety total return index increased 167.00% from December 31, 2001 through January 27, 2012. Over the same period the S&P500® Composite Equity Index increased 14.65%.

The additional returns represent rewards to companies and investors when firms both create and allow stakeholder to appreciate additional reputational value. The reputational statistics underpinning the Steel City Re Corporate Reputation Index, in addition to powering the RepuStars algorithms, also are a benchmarking resource to management providing an enterprise-level source of feedback on stakeholder perceptions of operational control.

The RepuStars Variety strategy identifies companies for which Steel City Re brand of Corporate Reputation Index metrics suggest a higher value than their current share price. “The metrics of the Corporate Reputation Index expose reputation value,” explains Dr. Nir Kossovsky, Chief Executive of Steel City Re, and author of the 2010 book, Mission: Intangible. Managing risk and reputation to create enterprise value.“Reputation is an expectation held by stakeholders – customers, employees, vendors, creditors, investors, and regulators -- that affects their actions; their actions impact company revenue and operating costs.”

Reputation risk is emerging as a major corporate concern. In 2010, more than 30% of the S&P500 constituent members disclosed in their annual filings that reputation risk was material to their enterprise value; nearly 1000 traded firms in total provided similar public disclosures. Just a year later, the accounting and audit firm Eisner and Amper reported that 69% of corporate Directors surveyed identified reputational risk as most important to their boards. In October 2011, Zurich Financial Services and Chartis introduced reputation insurances. And in December 2012, the number of S&P500 constitutent members disclosing in their annual filings that reputation risk was material climbed to 57%.

Before being added to the real time Dow Jones ITC 2.1 data feed of the CME Market Data Platform on November 1, 2011, RepuStars Variety was calculated by Steel City Re and published weekly on the Mission Intangible blog of the Intangible Asset Finance Society. The blog continues to report on reputation statistics and value-linked events.

Click here for a copy of Reputation is the new IP.

Steel City Re offers reputation risk mitigation and parametric-based risk transfer solutions to help its clients increase, protect and recover reputation value.

“Dow Jones Indexes” is the marketing name and the licensed trademark of CME Index Services, LLC. (CME Indexes). Dow Jones Indexes is a service mark of Dow Jones Trademark Holdings LLC. (Dow Jones). Investment products based on the RepuStars Variety Corporate Reputation Indexes are not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones or their respective affiliates, and CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of investing in such product(s).