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Names and Reputations: An Empirical Analysis

  • Ryan C. McDevitt

This paper tests several predictions from the literature on firm reputation, and confirms a main result: poor performance leads a firm to conceal its reputation. A residential plumbing firm with a record of complaints one standard deviation above the mean is 133.2 percent more likely to change its name. In addition, firms with longer track records are less likely to change their names or exit, while firms with more firm-specific investments, such as advertising, are more likely to change their names than exit. In addition, firms in small markets value their reputations comparatively more than firms in large markets. (JEL L14, L25, L84)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.3.3.193
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File URL: http://www.aeaweb.org/aej/mic/data/2009-0153_data.zip
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Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 3 (2011)
Issue (Month): 3 (August)
Pages: 193-209

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Handle: RePEc:aea:aejmic:v:3:y:2011:i:3:p:193-209
Note: DOI: 10.1257/mic.3.3.193
Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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  1. Ryan C. McDevitt, 2014. "“A” Business by Any Other Name: Firm Name Choice as a Signal of Firm Quality," Journal of Political Economy, University of Chicago Press, vol. 122(4), pages 909 - 944.
  2. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation?," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 415-41, April.
  3. Hubbard, Thomas N, 2002. "How Do Consumers Motivate Experts? Reputational Incentives in an Auto Repair Market," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 437-68, October.
  4. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation? Erratum," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 714, July.
  5. Waldfogel, Joel, 2008. "The median voter and the median consumer: Local private goods and population composition," Journal of Urban Economics, Elsevier, vol. 63(2), pages 567-582, March.
  6. Steven Tadelis, 1999. "What's in a Name? Reputation as a Tradeable Asset," American Economic Review, American Economic Association, vol. 89(3), pages 548-563, June.
  7. Ellickson, Paul, 2005. "Does Sutton Apply to Supermarkets?," Working Papers 05-05, Duke University, Department of Economics.
  8. Paul B. Ellickson, 2007. "Does Sutton apply to supermarkets?," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 43-59, 03.
  9. Katja Seim, 2006. "An empirical model of firm entry with endogenous product‐type choices," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 619-640, 09.
  10. Steven Tadelis, 2002. "The Market for Reputations as an Incentive Mechanism," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 854-882, August.
  11. Ryan C. McDevitt, 2011. "Names and Reputations: An Empirical Analysis," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 193-209, August.
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