Sleight of hand: High reputation and corporate governance

High-reputation firms benefit, in net terms, from positive perceptions of external audiences. However, recent research shows that the perceptions that benefit them sometimes create conflicting pressures that are difficult to navigate. We examine whether high-reputation firms use different patterns of behavior than other firms in order to reap benefits from the positive social judgment they possess. We argue that, when a range of related behavior is considered, high-reputation firms will avoid certain behaviors and substitute them with other, less objectionable ones to advance the same goals. In the corporate governance context, we find that, compared to other firms, high-reputation firms engage in lower levels of behaviors that are more likely to be perceived negatively by firm audiences, and they engage in higher levels of less interpretable behaviors.