Innovation and Growth Investment Through Capital Expenditure as a Channel and Boundary Condition Between Financial Performance and Corporate Reputation

ABSTRACT This study examines the role of capital expenditure in the relationship between financial performance and corporate reputation. Using moderation and mediation analyses based on multiple regressions with bootstrapping, we examined data from 121 airlines from 46 countries during 2007–2023. Empirical results showed that capital expenditure significantly impacted the link between various instances of company performance (profitability, liquidity, leverage, and solvency) and corporate reputation in the long run. Namely, higher capital expenditure multiplies the effect of company performance since corporate reputation depends on the use of company resources. In addition, well‐capitalized company performance entails growth and better use of company resources, which translates into stronger corporate reputation. The study stresses the importance of capital expenditure for an industry that is highly competitive, often requires over‐investment, and registers low profit margins. The most reputable companies in the eyes of stakeholders are the ones investing in fixed assets, beyond different facets of company performance.