Given the recent reputational, legal and regulatory risks … we believe the board is in need of independent leadership.
—Class A Equity Investors of News Corporation1
Equity investors express their expectations mostly by buying or selling shares. Through these direct behaviors, they establish stock prices and earnings multiples. Firms with superior reputations benefit from higher multiples on earnings. Poor reputations tend to result in higher stock price volatility and greater vulnerability to headline risks. In a reputational crisis, any firm may experience a collapse in stock price.
Recently, investors have begun voicing ...