Understanding how crisis events impact a company’s reputation and ultimately translate into a loss or gain in shareholder value is vitally important. PwC commissioned Oxford Metrica, which conducts evidence-based research in risk and financial performance, to research the shareholder impact of a major reputational crisis since 1980. Notably, this research was completed before the COVID-19 pandemic of 2020. However, the data set still reveals actionable insights: that the impact of reputation on shareholder value is far broader and more complex than previously thought.
With shock, comes opportunity. Companies perceived to have responded well to a crisis experience a 25% premium in share value.*
* After 250 trading days, as compared to those perceived to have not responded well.
“Destruction of shareholder value is avoidable, and a reputational crisis can paradoxically provide an opportunity for a company to enhance shareholder value. Ultimately, recovery depends on how swiftly and effectively management responds.”