Responsibility and strong leadership have a significant influence on the investment decisions of individual investors
T-Media’s extensive Reputation&Trust shows that the reputation of publicly traded companies is declining on average. The survey’s data, based on 24,353 company evaluations, reveals the significant role that corporate responsibility and leadership play in investment decisions.
In collaboration with the Finnish Shareholders’ Association and the Finnish Foundation for Share Promotion, T-Media surveyed retail investors’ views on the reputation of Finland’s 81 largest listed companies. The results reveal that the companies’ reputations are, on average, at a good level, but have declined from the previous year. The average reputation score for listed companies this year is 3.56; in last year’s survey, it was 3.60.
Source: Reputation&Trust Listed Companies Survey. The survey examined the reputation of 81 companies among Finnish retail investors. Based on the collected data, a reputation score on a scale of 1–5 was calculated for each company surveyed across eight different categories. The figures in the graph represent the averages of the surveyed companies and the ratings they received.
“Although we have seen massive declines in the reputation of individual companies in this year’s study, publicly traded companies generally continue to enjoy a good reputation. This indicates that, in the view of retail investors, these companies are in good shape. Among retail investors, reputation has a strong statistical correlation with willingness to invest and recommend. Thus, reputation is of enormous importance to publicly traded companies as a reliable and attractive investment target,” says Riku Ruokolahti, Development Director at T-Media.
The areas in which listed companies are considered to have the best reputation on average are their products and services, financial performance, and management. In contrast, retail investors’ perceptions of the companies’ performance as employers and their communication with stakeholders remain at a moderate level.
A meta-analysis based on a broad body of research indicates that, among the various dimensions of reputation, perceptions related to leadership have, on average, the greatest impact on investor confidence and behavior toward publicly traded companies. The importance of leadership is particularly pronounced in medium-sized companies.
When it comes to large corporations, however, corporate responsibility is the aspect of reputation that many consider most influential. The shift from the previous year is significant: in last year’s survey, leadership, governance, and products and services were cited more often than corporate responsibility as the most important aspects.
“Listed companies have invested more heavily and more visibly in sustainability initiatives and in communicating them, while the bar for sustainability has been raised. The ESG index* score we measured for listed companies—which broadly tracks perceptions of corporate responsibility—has declined and remained at a moderate level (3.46 on a scale of 1–5) among retail investors,” says Ruokolahti.
Kone is the most prestigious listed company – Nokia is the top performer
The listed companies with the best reputations in 2022 are Kone, Ponsse, and Vaisala, all of which achieved an excellent reputation score.
Table: Reputation&Trust Listed Companies Survey. The survey examined the reputation of all large and medium-sized listed companies on the stock exchange among Finnish retail investors. The companies are listed in order of reputation score.
Nokia saw the biggest improvement in its reputation in the study. Over the course of the year, the company managed to improve its overall reputation and its reputation across six different areas more than any other publicly traded company. The company improved its reputation more than others in governance, finance, leadership, innovation, products and services, and as an employer.
“It’s wonderful to see Nokia, a company that holds a special place in the hearts of many Finns, rise in reputation as well. No aspect of Nokia’s reputation is now rated as weak. The biggest improvement was in the financial aspect, but the second-largest improvement was in the area of restructuring, which is extremely difficult. Leadership is Nokia’s strongest dimension. Nokia CEO Pekka Lundmark has been able to win over private investors through his actions,” says Sari Lounasmeri, CEO of the Finnish Foundation for Share Promotion.
The IT services company Gofore received a higher score in the workplace category than any other publicly traded company. UPM, on the other hand, saw a significant decline in its workplace score, even though it managed to maintain its financial image and image related to innovation at a remarkably high level.
“Among forestry companies, UPM and Stora Enso saw their stock prices move in opposite directions, with UPM’s falling and Stora Enso’s rising. It appears that the months-long strike at UPM’s mills has had a significant impact on the company’s reputation among investors,” commented Victor Snellman, CEO of Osakesäästäjät, on the results.
Nokian Tyres and Fortum have seen the biggest drop in reputation, while MustiGroup has lost the most jobs
The companies that saw the biggest drops in reputation in the survey are Nokian Tyres and Fortum, which have been particularly hard hit by the crisis caused by Russia’s war of aggression. Nokian Tyres received a reputation score of 3.08. Its reputation fell by 0.59 points from last year, and the drop in its score was greater than that of any other company.
“Understandably, Fortum has been hit hard by ongoing financial and communication challenges,” Snellman says.
In the "workplace" category of the reputation survey, MustiGroup—which has faced a reputation crisis over its employment practices—saw a greater decline in its reputation than Nokia Tyres. MustiGroup also experienced a larger drop in reputation than any other company in the categories measuring transparency in management and administration, as well as ethical conduct.
“Well-managed organizations are also considered good employers. Conversely, satisfied employees create an image of competent leadership. At the same time, being a good employer is one of the key factors in building people’s trust and a major asset in attracting talent. Unfortunately, the mechanism also works the other way around: when a company loses points in the workplace category, management’s ratings often drop as well. This is exactly what happened to MustiGroup,” says Riku Ruokolahti of T-Media.
This is how we conducted the study
Reputation&Trust Listed Companies survey examined the reputation of 81 companies among Finnish retail investors. The companies were selected in accordance with Nasdaq’s market capitalization classification, which took effect in January 2022.
The companies’ reputations were measured using Reputation&Trust research model, which evaluates reputation based on eight factors: governance, finances, leadership, innovation, engagement, products & services, workplace, and corporate responsibility.
The survey targeted Finnish retail investors aged 15 and older nationwide. Data for the survey was collected via an online questionnaire between May 10 and June 27, 2022, in collaboration with the Finnish Foundation for Share Promotion and the Finnish Association of Shareholders.
A total of 16,847 Finns responded to the survey, providing a total of 24,353 company ratings. The statistical margin of error for the entire data set is at most approximately 0.76 percentage points in either direction. For an individual company, the margin of error for the reputation score is 0.04–0.06 points, depending on the standard deviation of the validated company-specific ratings.
*T-Media’s ESG index tracks perceptions of an organization’s environmental and social responsibility. ESG stands for environmental, social, and governance.
For more information about the study:
Riku Ruokolahti, Director of Development, T-Media Oy
+358 400 512 200
riku.ruokolahti@reptrust-staging.fi-p.seravo.com
Harri Leinikka, CEO, T-Media Oy
+358 40 505 5001
harri.leinikka@reptrust-staging.fi-p.seravo.com
