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Soft Information, Hard Sell: The Role of Soft Information in the Pricing of Intellectual Property

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  • William N. Goetzmann
  • Vicente Pons-Sanz
  • S. Abraham Ravid

Abstract

There is a growing literature on the differential impact of soft' vs. hard' information on organizational structure and behavior. This study is an attempt to empirically quantify the value of soft information, using a data-base on the market for screenplays. Script quality is difficult to estimate without subjective evaluation. Therefore soft information should be an integral part of the pricing of these intellectual assets. In our empirical analysis, we find that hard information' (reputation) variables as well as soft information' proxies are priced. Screenplays with high soft information content are priced significantly lower than high concept' harder information'- type scripts. We also follow the screenplays to production, and find that buyers seem to be able to forecast the success of a script, paying more for screenplays resulting in more successful films. In other words, high concept' (harder information) screenplays sell for more and result in more successful movies.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10468.

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Date of creation: May 2004
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Handle: RePEc:nbr:nberwo:10468

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  1. Allen N. Berger & Nathan H. Miller & Mitchell A. Petersen & Raghuram G. Rajan & Jeremy C. Stein, 2002. "Does Function Follow Organzizational Form? Evidence From the Lending Practices of Large and Small Banks," Harvard Institute of Economic Research Working Papers 1976, Harvard - Institute of Economic Research.
  2. Antoine Faure-Grimaud & Jean-Jacques Laffont & David Martimort, 2003. "Collusion, Delegation and Supervision with Soft Information," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 70(2), pages 253-279, 04.
  3. Robert Gibbons & Kevin J. Murphy, 1991. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," NBER Working Papers 3792, National Bureau of Economic Research, Inc.
  4. Richard B. Carter & Frederick H. Dark & Ajai K. Singh, 1998. "Underwriter Reputation, Initial Returns, and the Long-Run Performance of IPO Stocks," Journal of Finance, American Finance Association, vol. 53(1), pages 285-311, 02.
  5. Dina Mayzlin & Judith A. Chevalier, 2003. "The Effect of Word of Mouth on Sales: Online Book Reviews," Yale School of Management Working Papers, Yale School of Management ysm413, Yale School of Management.
  6. Carter, Richard B & Manaster, Steven, 1990. " Initial Public Offerings and Underwriter Reputation," Journal of Finance, American Finance Association, vol. 45(4), pages 1045-67, September.
  7. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
  8. De Vany, A. & Walls, W.D., 2000. "Does Hollywood make too many R-Rated Movies? Risk, Stochastic Dominance, and the Illusion of Expectation," Papers, California Irvine - School of Social Sciences 99-00-24, California Irvine - School of Social Sciences.
  9. C. Edward Fee, 2002. "The Costs of Outside Equity Control: Evidence from Motion Picture Financing Decisions," The Journal of Business, University of Chicago Press, vol. 75(4), pages 681-712, October.
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