Electronic Thesis and Dissertation Repository

Thesis Format

Integrated Article

Degree

Doctor of Philosophy

Program

Business

Supervisor

Wang, Xin (Shane)

Abstract

Since the underlying qualities of products and firms are not readily apparent, information asymmetry exists at the heart of marketing. This dissertation investigates information asymmetry that is present specifically between: (1) firms and consumers, and (2) firms and investors. I advance our knowledge of how information asymmetry can be reduced in beneficial ways for the firm either by voluntary or involuntary means. This dissertation consists of two essays. In Essay 1, I examine involuntary information leakage in the movie industry. I find that spoilers, which prematurely resolve plot uncertainty for those who have yet to see the movie, can increase box office revenues for movie studios. The positive spoiling effect is driven by uncertainty reduction, in which spoilers provide diagnostic information to consumers unsure about the quality of a movie. In Essay 2, I examine voluntary information leakage in the context of firm signaling. As investors do not have access to private information and cannot observe firm activities such as innovation projects and corporate policy changes, firms send signals to investors that provide cues to such information. I find that data breaches previously experienced by firms can serve as information that negatively influences the interpretation of otherwise positive signals. Taken together, this dissertation outlines implications for firms to effectively respond to and manage information asymmetry in the marketplace.

Summary for Lay Audience

This dissertation examines the imbalance of information that is present between two parties within a transaction. Because the true qualities of products and firms are not readily apparent, consumers and investors rely on information in their environment to make better decisions. I specifically examine the information imbalance between: (1) firms and consumers, and (2) firms and investors, in the contexts of movies and signaling respectively. In Essay 1, I find that spoiler reviews can increase box office revenues of movie studios because spoilers provide helpful information to consumers who are unsure about the quality of a movie. In Essay 2, I find that when firms provide cues to investors who are unsure about the quality of firms that are worth investing in, data breaches can serve as information that influences the interpretation of positive cues to have more negative meanings. This dissertation then outlines recommendations for firms to effectively manage these voluntary and involuntary leakages of information in the marketplace.

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