In the classroom, teachers signal their expectations of high-achieving students through their own behaviors, and in doing so, further motivate the students. The behaviors showing the most substantial effects are affective behavior, including warmth, supportiveness, negative affect, and so forth, physical distance, off-task behavior, input (i.e., amount and level of teaching), and duration of interaction. Students benefiting from such attention are at times jealously derided as “teacher’s pets.”

Analogously, in the capital markets, stakeholders signal their expectations of high-achieving companies through their own behaviors. They create demand for product and pay a price premium, provide labor and inventory on better terms, provide credit on better terms, and pay higher multiples for equity. Companies benefitting from such attention are “admired,” “respected,” and are “most reputable.” Competitors jealously watch as these “market pets” outperform.

Consider Apple, Inc. (NASDAQ:AAPL), as reflected in the Steel City Re Corporate Reputation Index™. Over the trailing twelve months, the company has been ranked  in the 100th percentile among its 51 peers in the Electronic Data Processing Equipment sector for nearly the entire period. The exponentially weighted moving average of its reputation ranking volatility is 1%, and its twelve-week velocity is 0. The company is outperforming its peers over this period by 37%.