People like Google (Nasdaq: GOOG). The Internet search giant ranks first in a just-released survey of positive public perception of the 60 "most visible" companies in the US. Apple Inc. (Nasdaq: AAPL) made it into the top five, too, but BP and AIG have the worst reputations, according to the findings of the 2011 Harris Interactive Reputation Quotient Study.
Respondents questioned the ethical standards of BP (NYSE: BP), AIG (NYSE: AIG), and the two other firms at the bottom the list, Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C), noting they have little confidence in the willingness of any of those four companies "to do the right things."
Results reflect the responses from 30,000 online panelists, who first selected five dozen firms they considered "most visible," and then rated each one on its emotional appeal, products and services, social responsibility, vision and leadership, workplace environment, and financial performance. Overall, the public has a generally positive view of corporate America, the research found.
Google ranked highest on every reputation component except emotional appeal. But Gary Briggs, VP of Consumer Marketing at Google, took the honor in his stride, noting the company "believes if we focus on making the best products for our users, all else will follow."
Google beat last year's winner, Warren Buffet's Berkshire Hathaway (NYSE: BRK.A), which fell to fourth this year. Johnson & Johnson (NYSE: JNJ) ranked second for a consecutive year, followed by 3M Company (NYSE: MMM). Apple, which has been climbing steadily since 2002, ranked fifth.
Sixteen companies earned excellent ratings, up from just six in 2010. And of the 54 companies that made the list for the past two years, 18 had significant positive increases in reputation compared to only two declines -- Toyota (NYSE: TM) and Monsanto (NYSE: MON).
A positive public perception is to a corporation what star power is to a person: hard to define, but obvious when you see it. It's arguably as important a metric for a public company as its profits or earnings, albeit harder to measure.
It's also been the target of increasing research. In 2005, for example, the Economist Intelligence Unit identified reputation as an issue that members of corporate boards described as potentially capable of destroying their businesses. And in both 2007 and 2009, the Conference Board issued reports on the growing strategic importance of managing corporate reputations.
The Reputation Institute (RI), a leading reputation consulting firm, concludes "changes in reputation have a powerful effect on market value... and vice-versa." On average, a 1% change in perception leads to 1% change in support and generates 1% improvement in financials, it estimates. The relationship between stock price and reputation is one of the topics on the agenda for the organization's 15th International Conference on Corporate Reputation, Brand, Identity, and Competitiveness, which will run from May 18 to 20 in New Orleans.
Last month, RI released its own list of companies that Americans most trust, admire, and "generally feel best about." Amazon (Nasdaq: AMZN) came in first, followed by Kraft Foods (NYSE: KFT).
Two companies from the Harris RQ top five, Johnson & Johnson and 3M, also earned top ratings, along with Kellogg's (NYSE: K), UPS (NYSE: UPS), FedEx (NYSE: FDX), and Sara Lee (NYSE: SLE). The least-reputable companies on the RI list: mortgage financier Freddie Mac (OTC: FMCC), Fannie Mae (OTC: FNMA), and AIG.
People are generally, but not always, more likely to invest in companies with good reputations. Walmart and McDonald's, which have just average reputations, are exceptions. How important is a company's public perception to your investment choices?