Emily Ulrich, PhD Candidate, The Wharton School
Abstract: Corporate reputation is a vital strategic asset for organizations. Yet, its socially constructed nature has made it challenging for scholars to agree on a precise definition or develop a reliable measurement strategy for it. Historically, scholars have relied on measures that are useful for assessing reputation earned but fail to capture its dynamic nature or identify emerging threats in real time, exposing a critical blind spot in both theory and practice. To address these limitations, I propose Cumulative Abnormal Media Sentiment (CAMS), a novel approach for identifying and analyzing reputational risks and opportunities by tracking abnormal volatility in stakeholder sentiment. To validate this construct, I conduct a quasi-replication of Caroline Flammer’s 2013 event study, extending her analysis of corporate news coverage of environmental events for U.S. publicly traded organizations through 2024. Using this expanded dataset, I measure reputational signals surrounding coverage of eco-friendly and eco-harmful corporate behavior. My analysis reveals a direct relationship between reputational risk from eco-harmful events and stock price volatility. This research offers new insights into the established relationship between reputation and financial performance, while introducing a replicable and adaptable measurement tool for event study analyses, equipping future researchers with a robust framework for examining the dynamic interplay between reputation and financial outcomes.