Theory suggests that reputations allow nonanonymous markets to attenuate adverse selection in trading. We identify instances in which New York Stock Exchange (NYSE) stocks experience trading floor relocations. Although specialists follow the stocks to their new locations, most brokers do not. We find a discernable increase in liquidity costs around a stock's relocation that is larger for stocks…
This study evaluates the certification and value-added roles of reputable venture capitalists (VCs). Using a novel sample of entrepreneurial start-ups with multiple financing offers, I analyze financing offers made by competing VCs at the first professional round of start-up funding, holding characteristics of the start-up fixed. Offers made by VCs with a high reputation are three times more li…
Do consumers really care about corporate reputation when it comes to purchasing decisions? This study tests that hypothesis by comparing consumers' perceptions of companies to the consumer equity of brands owned by those companies, using international studies of brand equity and corporate reputation. The results show that poor corporate reputation makes building strong brands difficult, but a g…
Previous research based on Situational Crisis Communication Theory (SCCT) suggests that an organization's past crises history affects the reputational threat posed by a current crisis when that crisis results from intentional acts by the organization. The study reported on in this article provides a wider test of crisis history to better assess its role in crisis communication. Results from the…
Extending social comparison theory to the context of interfirm competition, we investigate whether and under what conditions firms may benefit by deviating from consumers' views concerning firm comparisons. Based on all of the possible dyadic competitive comparisons among the 26 automakers in the United States, we found that: (1) a focal firm enjoys a greater increase in sales than the target f…
Product-harm crises often result in product recalls, which can have a significant impact on a firm's reputation, sales, and financial value. In managing the recall process, some firms adopt a proactive strategy in responding to consumer complaints, while others are more passive. In this study, the authors examine the impact of these strategic alternatives on firm value using Consumer Product Sa…
Job hopping' by engineers and scientists is widely heralded as an important channel for knowledge spillovers within industries. Far less is known, however, about the actions firms take to reduce the outward flow of knowledge through markets for skilled labor. This study investigates the efficacy of a lever that has received little research attention: corporate reputations for toughness in paten…
This article reports three experiments that examine how communication types (informational, relational, and coercive messages) and mutual trustworthiness reputations influence sequential bargaining between an uncertain manufacturer and an informed distributor in a marketing channel. In Experiment 1, bargainers use informational and relational messages to establish a positive social tenor in the…
The aim of this study is to illuminate reputational change processes and identify the underlying theoretical mechanisms. We draw upon extant literature to develop three distinct explanations for reputational change, respectively emphasizing criteria of organizational "character," symbolic conformity, and technical efficacy. We evaluate these explanations by examining the reputational consequenc…
We model the two-firm alliance as an iterated prisoners' dilemma game with an exit option and test several theoretical predictions in experimental studies regarding the effect of reputation information. Following the literature, we hypothesize that reputation benefits cooperation; however, our experimental results instead show that reputation decreases cooperation. A contingency explains this r…
This paper explores the contextual factors surrounding reputation damage and their potential implications for reputation repair. We propose a model that examines how (1) the multidimensional property of reputation, (2) organizational age, (3) diversity of market segments served by the organization, and (4) third parties influence a firm's perceived capability to cope with a reputation damaging …
Corrective advertising can be problematic because it undermines responses both to other products advertised by the corrected firm and to products advertised by second-party advertisers. However, a positive reputation insulates second-party firms from these carryover effects, provided that this reputation is based on an endorsement from an independent regulator. Furthermore, firm responses that …
This study models the choice of exchange partners as a staged process in which a firm first uses status to screen potential partners and then uses reputation to choose a specific firm within the chosen status bracket. We examine our model in the context of the U.S. audit industry and choices of new auditors by former clients of Arthur Andersen following its collapse in 2002. We show that accoun…
We study the effect of media coverage on corporate governance by focusing on Russia in the period 1999 to 2002. We find that an investment fund's lobbying increases coverage of corporate governance violations in the Anglo-American press. We also find that coverage in the Anglo-American press increases the probability that a corporate governance violation is reversed. This effect is present even…
We analyzed the autobiographies of 55 "management laureates" to learn how their life experiences influenced their careers and intellectual contributions. Our results indicate the probability of becoming a management laureate is enhanced by (a) receiving a doctoral degree from a prestigious university under the tutelage of an accomplished scholar; (b) seeking out and affiliating with a hot group…
Immediately following an initial public offering, underwriters often repurchase shares of poorly performing offerings in an apparent attempt to stabilize the price. Using proprietary Nasdaq data, I study the price effects and determinants of price support. Some of the key findings are (1) Stabilization is substantial, inducing price rigidity at and below the offer price; (2) I find no evidence …