Chapter 1. Why Reputations Matter

Anyone who follows the news knows that reputations matter. A banker gets caught with his hand in the till; a manager is accused of passing insider information to friends and family, enabling them to make money by trading his company’s stock; an oil company is accused of burying poisonous chemicals that have filtered into a region’s water supply and caused outbursts of cancer. Journalists and publicists bombard us daily with such bits of information.

What gets our attention? Often, our eye is caught by bold headlines that announce cataclysmic events and issues: scandals, accidents, deaths, and crises—negative events that cast a dark shadow on the reputations of companies and individuals. A disproportionate share ...

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