The Mediating Role of Reputation in the Relationship Between Non-Financial Performance and Financial Performance

Abstract

While academics have reached a consensus on the existence of a positive relationship between non-financial performance and financial performance, ongoing research indicated that there are variables that mediate this relationship. This study examines if a company’s reputation among the public mediates the relationship between four measures of non-financial performance and financial performance. A fixed effects model is used to study this. The analysis is done with the use of a panel data set of 79 U.S. companies with 479 observations from 2008-2018. The results show that non-financial performance has a positive effect on a company’s reputation among the public. Furthermore, the results show no support for relationships between non-financial performance and financial performance or reputation and financial performance. Therefore, this study finds no support for a mediating effect of reputation in the relationship between non-financial performance and financial performance. However, the results of this study are not robust.