Corporate leaders and their advisers are becoming obsessed with reputational damage.

In the age of social media and 24/7 news coverage a relatively small gaffe can attract huge attention- such as Sainsbury’s CEO Mike Coupe singing “we’re in the money” on air.

A faux pas can quickly go viral and affect the relationship customers and others may have with a company or a particular brand- it could weaken short term demand which in turn might spook shareholders.

But even though investors may take fright and dump the stock in the short term, the share price is likely to bounce back even after large scale misdemeanours- if the business model is fundamentally right.

For example, Starbucks may be accused of not paying enough tax, of racially discriminating against its customers and not caring enough about the environment, but people the world over love its coffee.

That’s why Nestle has agreed to pay $7.1bn to sell the Seattle-based coffee to home consumers.

Where a particular reputational issue creates real problems is if it alludes to a wider problem in the company.

The media might obsess over an embarrassing incident, but analysts and shareholders should be thinking: what’s really going on here?

Is a public faux pas just a one-off act that we can all succumb to- even a successful leader- or does it signal a deeper incompetence?

If incompetence leads to culture and strategy being neglected and the wrong business model being pursued, it could be game over.