Measuring Corporate Reputation through Online Social Media: A case study of the Volkswagen Emission Scandal

Abstract

Reputation, a priceless but yet essential factor in a company’s success, influences a company’s customers, employees, and even the public relations with the company. Therefore, most companies consider reputation building as a priority in their daily interaction with their staff and the public. Such companies that successfully build a good reputation, which attracted investors, staff, and goodwill of the public sometimes run into issues or events (i.e. self-inflicted or not) that can result in a significant change in their reputation. The series of events that happen after a reputation tarnishing event includes more related news article releases, comments in message boards, and an increase in the number of people talking about the event on social media. In this thesis, we analyzed the company’s online media reputation (i.e. online media sentiment) and compared it with their financial reputation (i.e. stock price and volume) using the Volkswagen (VW) emission scandal as a case study. We did this by computing the monthly correlation, weekly correlation, rolling correlation, partial correlation, trend analysis, and brought out the context of a discussion with a word clouds and we tested our hypothesis of a relationship between online media sentiment and stock values using the Granger causality test. This analysis was done not just on VW online media sentiment and stocks but also on Ford, Toyota, and Audi as control cases for the period under analysis (i.e. VW scandal period). The result shows that during the heat of the scandal the company that is involved (i.e. VW) is the one that presents their sentiment result to be a measure of their reputation only in the media sources that had their context based on the scandal(i.e. news and Twitter) and with a stronger relationship in the weeks of major scandalous news or events. This relationship is not so for other substitute companies’ media dataset like Ford and Toyota whose media context and sentiment were not influenced by the VW scandal events. While Audi, a subsidiary of VW, and our third control case presented sentiment to be a relative measure of the corporate reputation in the news dataset because that is the only dataset of it that had the VW emissions scandal as one of its main focal points of discussion during the scandal timeline.