When do third-party product reviews affect firm value and what can firms do? The case of media critics and professional movie reviews

Journal of Marketing

Volumn 76, Issue 2, 2012, Pages 116-134

  Chen, Yubo ^a,b   Liu, Yong ^b   Zhang, Jurui ^b  

^a TSINGHUA UNIVERSITY   (China)

^b UNIVERSITY OF ARIZONA   (United States)

Author keywords

Advertising; Entertainment industry; Event study; Firm valuation; Media critics; Movies; Professional reviews; Third party product review

Indexed keywords

EID: 84859581016     PISSN: 00222429     EISSN: None     Source Type: Journal    
DOI: 10.1509/jm.09.0034     Document Type: Review

References (93)

1. Ackerberg, Daniel (2001), "Empirically Distinguishing Informative and Prestige Effects of Advertising," The RAND Journal of Economics, 32 (2), 316-33.
2. Alba, Joseph and Wesley Hutchinson (1987), "Dimensions of Consumer Expertise," Journal of Consumer Research, 13 (March), 411-54.
3. Asquith, Paul and David Mullins (1986), "Equity Issues and Offering Dilution," Journal of Financial Economics, 15 (1/2), 61-89.
4. Bagwell, Kyle (2007), "The Economic Analysis of Advertising," in Handbook of Industrial Organization, Vol. 3, M. Armstrong and R. Porter, eds. Amsterdam: Elsevier, 1701-1844.
5. Banerjee, Scott (2006), "Video Game Reviews Presage Stock Moves," MarketWatch, (June 8), (accessed November 11, 2011), [available at: http://www.marketwatch.com/story/videogame-reviews-presage-stock-moves].
6. Barber, Brad and Terrance Odean (2008), "All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors," Review of Financial Studies, 21 (2), 785-818.
7. Bartov, Eli, Dan Givoly, and Carla Hayn (2002), "The Rewards to Meeting or Beating Earnings Expectations," Journal of Accounting and Economics, 33 (6), 173-204.
8. Basuroy, Suman, Subimal Chatterjee, and S. Abraham Ravid (2003), "How Critical Are Critical Reviews? The Box Office Effects of Film Critics, Star-Power, and Budgets," Journal of Marketing, 67 (October), 103-117. (Pubitemid 37347413)
9. Becker, Gary and Kevin Murphy (1993), "A Simple Theory of Advertising as a Good or Bad," Quarterly Journal of Economics, 108 (4), 941-64.
10. Brouwer, Alexandra and Thomas Wright (1990), Working in Hollywood. New York: Avon Books.
11. Burgstahler, David and Michael Eames (2006), "Management of Earnings and Analysts' Forecasts to Achieve Zero and Small Positive Earnings Surprises," Journal of Business Finance & Accounting, 33 (5/6), 633-52. (Pubitemid 44229879)
12. Bushee, Brian, John Core, Wayne Guay, and Sophia Hamm (2010), "The Role of the Business Press as an Information Intermediary," Journal of Accounting Research, 48 (1), 1-19.
13. Caves, Richard (2001), Creative Industries: Contracts Between Art and Commerce. Cambridge, MA: Harvard University Press.
14. Chakravarty, Anindita, Yong Liu, and Tridib Mazumdar (2010), "The Differential Effects of Online Word-of-Mouth and Critics' Reviews on Pre-release Movie Evaluation," Journal of Interactive Marketing, 24 (3), 185-97.
15. Chaney, Paul K., Timothy M. Devinney, and Russell S. Winer (1991), "The Impact of New Product Introductions on the Market Value of Firms," Journal of Business, 64 (4), 573-610.
16. Chen, Yubo, Shankar Ganesan, and Yong Liu (2009), "Does a Firm's Product-Recall Strategy Affect Its Financial Value? An Examination of Strategic Alternatives During Product-Harm Crises," Journal of Marketing, 73 (November), 214-26.
17. - and Jinhong Xie (2005), "Third-Party Product Review and Firm Marketing Strategy," Marketing Science 24 (2), 218-40. (Pubitemid 40816479)
18. - and - (2008), "Online Consumer Review: Word-of- Mouth as a New Element of Marketing Communication Mix," Management Science, 54 (3), 477-91. (Pubitemid 351463128)
19. Crawford, C. Merle (1977), "Marketing Research and the New Product Failure Rate," Journal of Marketing, 41 (April), 51-61.
20. Dellarocas, Chrysanthos (2003), "The Digitization of Word-of- Mouth: Promise and Challenges of Online Reputation Systems," Management Science, 49 (10), 1407-1424.
21. Duan, Wenjing, Bin Gu, and Andrew B. Whinston (2008), "Do Online Reviews Matter? An Empirical Investigation of Panel Data," Decision Support Systems, 45 (4), 1007-1016.
22. Einav, Liran and S. Abraham Ravid (2009), "Stock Market Response to Changes in Movie's Opening Dates," Journal of Cultural Economics, 33 (4), 311-19.
23. Elberse, Anita (2007), "The Power of Stars: Do Star Actors Drive the Success of Movies?" Journal of Marketing, 71 (October), 102-120.
24. - and Bharat Anand (2007), "The Effectiveness of Prerelease Advertising for Motion Pictures: An Empirical Investigation Using a Simulated Market," Information Economics and Policy, 19 (3/4), 319-43.
25. - and Jehoshua Eliashberg (2003), "Demand and Supply Dynamics for Sequentially Released Products in International Markets: The Case of Motion Pictures," Marketing Science, 22 (3), 329-54.
26. Eliashberg, Jehoshua and Steven Shugan (1997), "Film Critics: Influencers or Predictors?" Journal of Marketing, 61 (April), 68-78.
27. Erdem, Tülin and Michael Keane (1996), "Decision-Making Under Uncertainty: Capturing Dynamic Brand Choices in Turbulent Consumer Goods Markets," Marketing Science, 15 (1), 1-20.
28. Fama, Eugene (1970), "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, 25 (2), 383-417.
29. - (1991), "Efficient Capital Markets: II," Journal of Finance, 46 (December), 1575-1617.
30. Gervais, Simon, Ron Kaniel, and Dan H. Mingelgrin (2001), "The High-Volume Return Premium," Journal of Finance, 56 (3), 877-919. (Pubitemid 33581668)
31. Godes, David and Dina Mayzlin (2004), "Using Online Conversations to Study Word-of-Mouth Communication," Marketing Science, 23 (4), 545-60.
32. Goldman, Jim (2007), "Early iPhone Data Disappoints, Sending Apple Stock Lower," CNBC, (July 24), (accessed November 11, 2011), [available at http://www.cnbc.com/id/19930403/Early-iPhone-Data-Disappoints-Sending-Apple- Stock-Lower].
33. Grossman, Gene and Carl Shapiro (1984), "Informative Advertising with Differentiated Product," Review of Economic Studies, 51 (1), 63-81.
34. Grullon, Gustavo, George Kanatas, and James P. Weston (2004), "Advertising, Breadth of Ownership, and Liquidity," Review of Financial Studies, 17 (2), 439-61. (Pubitemid 39159589)
35. Hanssens, Dominique, Roland Rust, and Rajendra Srivastava (2009), "Marketing Strategy and Wall Street: Nailing Down Marketing's Impact," Journal of Marketing, 73 (November), 115-18.
36. Hirshleifer, David, James N. Myers, Linda A. Myers and Siew Hong Teoh (2008), "Do Individual Investors Drive Post-Earnings Announcement Drift? Direct Evidence from Personal Trades," Accounting Review, 83 (6), 1521-50.
37. Holbrook, Morris (1999), "Popular Appeal Versus Expert Judgments of Motion Pictures," Journal of Consumer Research, 26 (September), 144-55.
38. Holthausen, Robert and Richard Leftwich (1986), "The Effect of Bond Rating Changes on Common Stock Prices," Journal of Financial Economics, 17 (1), 57-89.
39. Huang, Dongling, Andrei Strinev, and Brian Ratchford (2008), "The Role of Advertising and Consumer Interest in the Motion Picture Industry," working paper, University of Texas at Dallas.
40. Huberman, Gur and Tomer Regev (2001), "Contagious Speculation and a Cure for Cancer: A Non-Event That Made Stock Prices Soar," Journal of Finance, 56 (1), 387-96.
41. Hutchinson, J. Wesley, and Danny L. Moore (1984), "Issues Surrounding the Examination of Delay Effects of Advertising," in Advances in Consumer Research, Vol. 11, Tom Kinnear, ed. Provo, UT: Association for Consumer Research, 650-55.
42. Joshi, Amit and Dominique Hanssens (2009), "Movie Advertising and the Stock Market Valuation of Studios: A Case of 'Great Expectations'?" Marketing Science, 28 (2), 239-50.
43. Jowett, Garth and James Linton (1989), Movies as Mass Communication: The Sage CommText Series. Newbury Park, CA: Sage Publications.
44. Kahneman, Daniel (1973), Attention and Effort. Englewood Cliffs, NJ: Prentice Hall.
45. Kasznik, Ron and Maureen McNichols (2002), "Does Meeting Expectations Matter? Evidence from Analyst Forecast Revisions and Share Prices," Journal of Accounting Research, 40 (3), 727-59. (Pubitemid 36256429)
46. Kinney,William, David Burgstahler, and Roger Martin (2002), 'The Materiality of Earnings Surprise," Journal of Accounting Research, 40 (5), 1297-1329.
47. Kothari, S.P. and Jerold Warner (2007), "Econometrics of Event Studies," in Handbook of Corporate Finance, Vol. 1, B. Eckbo, ed. Amsterdam: Elsevier, 3-36.
48. Krider, Robert, Tieshan Li, Yong Liu, and Charles Weinberg (2005), "The Lead-Lag Puzzle of Demand and Distribution: A Graphical Method Applied to Movies," Marketing Science, 24 (4), 635-48.
49. Lampel, Joseph and Jamal Shamsie (2000), "Critical Push: Strategies for Creating Momentum in the Motion Picture Industry," Journal of Management, 26 (2), 233-57.
50. Lane, Vicki and Robert Jacobson (1995), "Stock Market Reactions to Brand Extension Announcements: The Effects of Brand Attitude and Familiarity," Journal of Marketing, 59 (January), 63-77.
51. Linton, James and Joseph Petrovich (1988), "The Application of the Consumer Information Acquisition Approach to Movie Selection," in Current Research in Film: Audience, Economics and Law, Vol. 4, Bruce Austin, ed. Norwood, NJ: Ablex Publishing, 24-45.
52. Litman, Barry and Linda Kohl (1988), "Predicting Financial Success of Motion Pictures: The 80's Experience," Journal of Media Economics, 2 (Fall), 35-50.
53. Liu, Yong (2006), "Word-of-Mouth for Movies: Its Dynamics and Impact on Box Office Revenue," Journal of Marketing, 70 (July), 74-89. (Pubitemid 44116460)
54. -, Yubo Chen, Robert Lusch, Hsinchun Chen, David Zimbra, and Shuo Zeng (2010), "User-Generated Content on Social Media: Predicting New Product Market Success from Online Word-of-Mouth," IEEE Intelligent Systems, 25 (1), 75-78.
55. Lopez, Thomas and Lynn Rees (2002), "The Effect of Beating and Missing Analysts' Forecasts on the Information Content of Unexpected Earnings," Journal of Accounting, Auditing, and Finance, 17 (2), 155-84.
56. Lowe, Rosemary H. and Ivan D. Steiner (1968), "Some Effects of the Reversibility and Consequences of Decision on Postdecision Information Preferences," Journal of Personality and Social Psychology, 8 (2), 172-79.
57. MacKinlay, A. Craig (1997), "Event Studies in Economics and Finance," Journal of Economics Literature, 35 (1), 13-39. (Pubitemid 127461268)
58. Marich, Robert (2005), Marketing to Moviegoers: A Handbook of Strategies Used by Major Studios and Independents. Amsterdam: Elsevier.
59. McWilliams, Abagail and Donald Siegel (1997), "Event Studies in Management Research: Theoretical and Empirical Issues," The Academy of Management Journal, 40 (3), 626-57.
60. Metcalfe, Janet (1993), "Novelty Monitoring, Metacognition, and Control in a Composite Holographic Associative Recall Model: Implications for Korsakoff Amnesia," Psychological Review, 100 (January), 3-22.
61. Milgrom, Paul and John Roberts (1986), "Price and Advertising Signals of Product Quality," Journal of Political Economy, 94 (4), 796-821.
62. Mitchell, Mark and J. Harold Mulherin (1994), "The Impact of Public Information on the Stock Market," Journal of Finance, 49 (3), 923-50.
63. Morgan, Neil and Lopo Rego (2006), "The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance," Marketing Science, 25 (5), 426-39. (Pubitemid 44664555)
64. MTV News (2008), "How Video Game Reviews Affect What You Play-and What Developers Make," (May 29), (accessed November 16, 2011), [available at http://www.mtv.com/news/articles/1588303/what-video-game-reviews-mean- developers.jhtml].
65. Nelson, Phillip (1974), "Advertising as Information," Journal of Political Economy, 82 (4), 729-53.
66. NPR (2008), "Metacritic Offers Mega Reviews," Weekend Edition Sunday, (February 24), (accessed November 16, 2011), [available at http://www.npr.org/templates/story/story.php?storyId=19315189].
67. Palia, Darius, S. Abraham Ravid, and Natalia Reisel (2008), "Choosing to Cofinance: Analysis of Project-Specific Alliances in the Movie Industry," Review of Financial Studies, 21 (2), 483-511.
68. Pashler, Harold and James Johnston (1998). "Attentional Limitations in Dual-Task Performance," in Attention, Harold Pashler, ed. Hove, UK: Psychology Press, 155-89.
69. Peng, Lin and Wei Xiong (2006), "Investor Attention, Overconfidence and Category Learning," Journal of Financial Economics, 80 (3), 563-602. (Pubitemid 43705623)
70. Radas, Sonja and Steven Shugan (1998), "Seasonal Marketing and Timing New Product Introductions," Journal of Marketing Research, 35 (August), 296-315.
71. Ravid, S. Abraham (1999), "Information, Blockbusters, and Stars: A Study of the Film Industry," Journal of Business, 72 (4), 463-92.
72. Reddy, Srinivas, Vanitha Swaminathan, and Carol Motley (1998), "Exploring the Determinants of Broadway Show Success," Journal of Marketing Research, 35 (August), 370-83.
73. Reichheld, Frederick (2003), "The One Number You Need to Grow," Harvard Business Review, 81 (December), 46-54.
74. Reinstein, David and Christopher Snyder (2005), "The Influence of Expert Reviews on Consumer Demand for Experience Goods: A Case Study of Movie Critics," Journal of Industrial Economics, 53 (1), 27-51. (Pubitemid 40482860)
75. Rennhoff, Adam and Kenneth Wilbur (2011), "The Effectiveness of Post-Release Movie Advertising" International Journal of Advertising, 30 (2), 305-328.
76. Samuelson, Paul (1965), "Proof that Properly Anticipated Prices Fluctuate Randomly," Industrial Management Review, 6 (2), 41-49.
77. Sawhney, Mohanbir and Jehoshua Eliashberg (1996), "A Parsimonious Model for Forecasting Gross Box-Office Revenues of Motion Pictures," Marketing Science, 15 (2), 113-31.
78. Sawyer, Alan. G. and Scott Ward (1979), "Carry-over Effects in Advertising Communication," in Research in Marketing, Vol. 2. Greenwich, CT: JAI Press, 259-314.
79. Shaffer, Greg and Florian Zettelmeyer (2002), "When Good News About Your Rival Is Good for You: The Effect of Third-Party Information on the Division of Channel Profits," Marketing Science, 21 (3), 273-93.
80. Sivadas, Eugene and F. Robert Dwyer (2000), "An Examination of Organizational Factors Influencing New Product Success in Internal and Alliance-Based Processes," Journal of Marketing, 64 (January), 31-49.
81. Skinner, Douglas and Richard Sloan (2001), "Earnings Surprises, Growth Expectations, and Stock Returns or Don't Let an Earnings Torpedo Sink Your Portfolio," Review of Accounting Studies, 7 (2/3), 289-312.
82. Smith, Scott (1998), The Film 100: A Ranking of the Most Influential People in the History of the Movies. New York: Citadel Press.
83. Srinivasan, Shuba and Dominique M. Hanssens (2009), "Marketing and Firm Value: Metrics, Methods, Findings, and Future Directions," Journal of Marketing Research, 73 (June), 293-312.
84. Stigler, George (1961), "The Economics of Information," Journal of Political Economy, 69 (3), 213-25.
85. Sullivan, Mark (2008), "Seven Great Sites About Music and Literature," PC World, (October 1), (accessed November 16, 2011), [available at http://www.pcworld.com/article/151436/7-great-sites-about-music- and-literature.html].
86. Sun, Monic (2009), "How Does Variance of Product Ratings Matter," working paper, Graduate School of Business, Stanford University.
87. Tellis, Gerard and Joseph Johnson (2007), "The Value of Quality," Marketing Science, 26 (6), 758-73.
88. Time (2009), "50 Best Websites 2009," (August 24), (accessed November 16, 2011), [available at http://www.time.com/time/specials/packages/ completelist/0,29569,1918031,00.html].
89. Vogel, Harold (2001), Entertainment Industry Economics: A Guide for Financial Analysis, 5th ed. Cambridge, UK: Cambridge University Press.
90. Wiles, Michael and Anna Danielova (2009), "The Worth of Product Placement in Successful Films: An Event Study Analysis," Journal of Marketing, 73 (July), 44-63.
91. Wyatt, Robert and David Badger (1990), "Effects of Information and Evaluation in Film Criticism," Journalism Quarterly, 67 (Summer), 359-68.
92. Yahoo! Finance (2008), "Sony Corporation," (accessed December 15, 2008), [available at http://messages.finance.yahoo.com/Business-%26-Finance/ Investments/Stocks-%28A-to-Z%29/Stocks-S/threadview?bn=16844&tid= 12013&mid=12013].
93. Zajonc, Robert (2001), "Mere Exposure: A Gateway to the Subliminal," Current Directions in Psychological Science, 10 (6), 224-28.