Mcdevitt (2010) - Names And Reputations An Empirical Analysis

Reference(s)

McDevitt, Ryan (2010), "Names and Reputations: An Empirical Analysis," mimeo, northwestern university pdf

Abstract

This paper tests several predictions of the theoretical literature on firm reputation. A main result in the literature, that poor past performance will prompt a firm to conceal its reputation, is confirmed empirically in the market for residential plumbing services. A firm with a record of complaints one standard deviation above the mean was 133.2% more likely to change its name than the average �firm. In addition, �firms with longer track records were less likely to change their names or exit, while �firms that made more �firm-specific investments, such as advertising, were more likely to change their names than exit. Finally, �firms in small markets were found to value their reputations comparatively more than firms in large markets.