The Impact of Ownership Structure on Corporate Reputation: Evidence From Spain


  • We are grateful to Pablo de Andrés, the participants at the British Academy of Management 2005 Conference, the 26th SMS International Annual Conference, and the ACEDE 2008 Conference for their helpful comments. Data collection assistance from Roberto Moisén is gratefully acknowledged. Special thanks to the editor, the associate editor and the two anonymous reviewers. Any remaining errors are entirely our responsibility.

Departamento de Economía y Administración de Empresas, Facultad de CC.EE. y Empresariales, C/Parralillos s/n, 09001-BURGOS, Spain. Tel: 34-947-25-90-32; Fax: 34-947-25-89-60; E-mail:


Manuscript Type: Empirical

Research Question/Issue: This study examines the influence of firms' ownership structure on corporate reputation.

Research Findings/Insights: Using archival data from a panel of firms in Spain for 2000–2007, we found that ownership concentration in the hands of the largest shareholder erodes corporate reputation, whereas contestability of the main shareholder's power enhances it. Insider ownership shows a non-linear relationship with corporate reputation, with lower corporate reputation at low and very high levels of insider ownership. Finally, if the largest shareholder is either a pressure-resistant or a pressure-sensitive institutional investor, as opposed to other types of largest shareholder, corporate reputation is lower. This last finding markedly differentiates our sample of firms in Spain, a civil law country, from firms in common law countries such as the US and the UK, where studies have found a positive relationship between institutional investors and corporate reputation.

Theoretical/Academic Implications: Drawing on signaling and agency theories, our paper is, to the best of our knowledge, the first to analyze the influence of ownership structure on corporate reputation in civil law countries.

Practitioners/Policy Implications: This study suggests that managers and directors should recognize how each characteristic of ownership structure influences the expectations of stakeholders. Low levels of ownership concentration in the hands of the largest shareholders, low differences in ownership concentration between first and second largest shareholders, and moderate levels of insider ownership are positive signals that should be communicated to foster corporate reputation. High levels of ownership concentration in the hands of the largest shareholders or high differences in ownership concentration between first and second largest shareholders impair corporate reputation and should be compensated by introducing corporate governance mechanisms that favor corporate reputation, such as increasing the number of independent directors or avoiding CEO duality.