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Country Reputation and Corporate Activity

Author

Listed:
  • Mehmet I. Canayaz

    (Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802)

  • Alper Darendeli

    (Nanyang Business School, Nanyang Technological University, Singapore 639798)

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.

Suggested Citation

  • Mehmet I. Canayaz & Alper Darendeli, 2024. "Country Reputation and Corporate Activity," Management Science, INFORMS, vol. 70(3), pages 1483-1504, March.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:3:p:1483-1504
    DOI: 10.1287/mnsc.2023.4753
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