Some companies are perceived by financial analysts and the markets as being more reliable, trustworthy and accountable than others. Possessing such a reputation is a great asset for a company. If the financial community has faith in it, the company is more likely to be able to attract the financial resources necessary to sustain its sometimes risk-taking strategies.

However there has been little research to date examining how companies build and preserve the trust of the financial community. The authors of this paper studied the formation of corporate reputation among financial analysts and investors by analysing 62 strategic plans presented to the financial community by companies listed on the Milan Stock Exchange between 2001 and 2004. Through an archival search, a study of share price movements and comments in the financial press and in analysts’ reports, the authors were able to discriminate between which companies had been effective and which were ineffective in presenting their strategic plans.

A comparative analysis then allowed the authors to identify the distinctive traits of plans that seemed to positively or negatively influence the reactions of analysts and investors. They found that a company’s reputation among analysts and investors rests on synergy among three elements: a reputed and committed leadership; detailed and realistic presentations of strategic plans; and credible and independent internal control systems. This paper also uses case studies from its research to illustrate each of these elements.
 
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