Country Reputation and Corporate Activity

Mehmet I. Canayaz () and Alper Darendeli ()
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Mehmet I. Canayaz: Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802
Alper Darendeli: Nanyang Business School, Nanyang Technological University, Singapore 639798

Management Science, 2024, vol. 70, issue 3, 1483-1504

Abstract: We study the link between a previously neglected form of intangible firm asset—country reputation—and corporate sales. By exploiting variation in nationalities of foreign victims in local terror attacks, we detect unanticipated distortions in reputations of local countries in foreign countries and we pin down reductions in sales of local country firms in foreign markets. The reductions in sales are economically and statistically significant, persistent, and more pronounced after attacks with high levels of foreign media coverage. Local country firms, whose names resemble names from their countries of origin, experience greater deteriorations in their sales. The distortions in country reputations are associated with depreciations in overall firm value, sales growth, and profitability.

Keywords: intangible assets; country reputation risk; multinational corporations; corporate sales; marketing: advertising and media (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:3:p:1483-1504

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