FIN 800 Study Guide - Reputational Risk, Reputation Capital, Financial Services
Document Summary
Financial services comprise an array of special businesses because they deal mainly with other people"s money, and because problems that arise in fi can trigger serious external costs. Competition between fis have intensified by deregulation and rapid innovation in financial products and processes. Reputation: opinion (social evaluation) of public toward a person, a group of people, or an organization. In business context, reputation helps drive excess value of business firm and metrics as the market-to-book ratio. Sources of gain/loss in reputational capital: cumulative reputation of the firm, including its self-promoted ethical image, economic performance market share, profitability, and growth. Stakeholder interface shareholders, employees, clients, and suppliers. Legal interface civil and criminal litigation and enforcement actions. Proximate symptoms of sources of loss in reputation capital include. Investor flight and increase in the cost of capital: client flight and loss of market share, talent flight.
