Transformational Leadership and Financial Performance:The Mediating Role of Corporate Reputation

This quantitative research study seeks to determine the effect of thetransformational leadership style on the reputation and financial performance of manufacturing companieslisted on the Indonesia Stock Exchange. Data was collected via a survey questionnaire distributed to manufacturing firms and processed using a structural equation model. The results indicate that transformational leadership can significantly improve acompanys reputation,which in turncanimprove its financial performancesincecompany reputation was found tomediatethe relationship between transformational leadership and financial performance.Of the four key dimensions of transformational, leadership, intellectual stimulation was found to bethe most powerful indicator of style.Transformational leadership, however, was found not to have a significant direct impact on financial performance and could even worsen it. These findings give the implicationthat companies must pay attention tohow they implement transformational leadership as in the absence of a strong corporate reputation, this style of leadership alone will notimprove theirfinancial performance.This research is expected to be helpfultocompanies engaged in the manufacturing sector.