The importance of reputation and legitimacy for financial supervisors

• Autor(a) principal: Kaponya, Éva
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/85960
• topic: Organisational reputation; Legitimacy; Financial supervisors; Financial regulators; Public sector; Room for manoeuvre; Regulatory policy; Cost of intervention; Reputação organizacional; Legitimidade; Supervisores financeiros; Reguladores financeiros; Sector público; Espaço de manobra; Política regulatória; Custos de intervenção; Domínio/Área Científica::Ciências Sociais::Ciências da Comunicação

Financial supervisors, apart from that of a narrow professional audience, are rarely in the spotlight of the general interest of society or that of communication studies. Likewise, although reputation and legitimacy are intensely researched concepts in various academic fields, when it comes to the public sector, they remain in the blind spot of investigations. Due to the recent financial crisis, however, financial regulators’ media and social salience gained importance in the past few years, leading to the need for more profound understanding on their organisational specificities relevant for stakeholder interaction. Against this background, the paper aims to fill in a gap identified in the intersection of an intensely and a scarcely researched academic area, by providing, for the first time, a targeted and systematised literature review, analysis and collection of stylised facts and empirical results relevant for the financial supervisory and regulatory context. The research question that the current study intends to explore is that strong positive reputation and legitimacy bring valuable benefits to supervisors, enable the widening of the room for manoeuvre, and ultimately, lead to the reduction of implementation costs of regulatory changes and that of interventions. In order to gain proper insight and validate the plausibility of this hypothesis, the present paper analyses key related concepts – such as transparency, credibility, trust, processes of judgement formation, forms and elements of reputation and legitimacy – and empirical findings on public sector entities. Organised around the assessment of the above referred research question, the analysis proves that – such as common understanding in the corporate world – legitimacy and reputation are sophisticated resources attributing important benefits to the organisation, which shall not be left unexploited by financial supervisors either. It is shown that the opportunity provided by legitimacy and reputation through a higher level of credibility, recognition, and trust granted by the members of the society translates into enhanced, voluntary deference and higher acceptance of the authority’s decisions, which lead to the widening of the room for manoeuvre. As a first targeted and systematised review and analysis, the paper also serves as a firm base for future, practice oriented research on relevant optimal strategies that would empower financial supervisors to achieve the desired degree of reputation and legitimacy in order to take advantage of their full potentials while serving the public interest.