This study examines how governance-related reputational incidents affect investors’ perceptions of firms’ competence and integrity, as reflected in capital market reactions. Using a sample of U.S. firms from 2007–2023 and event-level data from the RepRisk database, I analyze contemporaneous market responses to publicly disclosed governance-related reputational shocks. Employing a pseudo-event matching design, I document that such incidents are associated with significant negative abnormal returns, increased abnormal trading volume, and a decline in implied volatility. These findings suggest that governance-related reputational incidents function as informative non-financial events that simultaneously reduce firm value, stimulate heterogeneous investor trading, and clarify assessments of future risk. Disaggregating incidents into specific categories I find substantial heterogeneity in trading and uncertainty responses across incident types. Further analyses show that the reach of information sources amplifies price and trading reactions, while severity and novelty play more limited roles. Prior reputation primarily affects trading activity rather than valuation or uncertainty. Overall, the study highlights the multidimensional nature of market discipline imposed through reputational channels.