The value of quality

Gerard J. Tellis, Joseph Johnson

Research output: Contribution to journalArticle

92 Scopus citations

Abstract

Product quality is probably undervalued by firms because there is little consensus about appropriate measures and methods to research quality. We suggest that published ratings of a product's quality are a valid source of quality information with important strategic and financial impact. We test this thesis by an event analysis of abnormal returns to stock prices of firms whose new products are evaluated in The Wall Street Journal. Quality has a strong immediate effect on abnormal returns, which is substantially higher than that for other marketing events assessed in prior studies. Moreover, there are some important asymmetries in the effect. We discuss the research, managerial, investing, and policy implications.

Original languageEnglish (US)
Pages (from-to)758-773
Number of pages16
JournalMarketing Science
Volume26
Issue number6
DOIs
StatePublished - Nov 1 2007
Externally publishedYes

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Keywords

  • New products
  • Published reviews
  • Quality
  • Stock returns

ASJC Scopus subject areas

  • Business and International Management
  • Marketing

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