Dispersio latin5/28/2023 ![]() decreasing) dispersion, weakening the brand rating–firm value relationships. This suggests that investors react less positively to changes in brand rating in the presence of increasing (vs. In contrast, when such brand rating enhancements are accompanied by decreases in dispersion, investors would then be more certain of the brand's rating improvement and take these expected effects into account. Indeed, if there are increases in dispersion and quality heterogeneity, investors would question the brand's true performance, restraining their responses to brand rating enhancements. Increasing dispersion thus weakens the conviction of future cash flows that investors may expect from such apparent mean-level brand improvements ( Aaker and Jacobson 2001). Dispersion indicates a lack of consensus and limits the “social proof” of brand ratings ( Cialdini 1993). Essentially, high dispersion can indicate to investors that brand rating improvements may not be that credible, certain, or reliable ( Tversky and Kahneman 1983). 5 Dispersion's indirect role is related to its ability to affect investors’ confidence in-and thus response to- brand rating information. We expect that brand dispersion may also mitigate the stock market performance benefits of mean-level brand ratings. Erdem, Mayhew, and Sun (2001) also report a similar asymmetrical effect for downside versus upside price discrepancies. upside, positive) information in user-generated content on stock returns and idiosyncratic risk. ![]() ![]() For example, Tirunalli and Tellis (2012) find stronger effects of downside, negative (vs. Investors may be more sensitive to the shift to the downside because downside, negative information is more diagnostic and influential and, thus, more likely to catch attention and affect investor decisions. Increases in upside dispersion reflect a shift to more brand lovers, whereas increases in downside dispersion reflect a shift to more brand haters. Prior studies have also used this semivariance approach (Rego, Billet, and Morgan 2009 Tuli and Bharadwaj 2009). 4 We define downside (upside) dispersion as the observed variability in cross-consumer brand ratings when the brand ratings are lower (higher) than the neutral point. Investors’ reactions to upside versus downside dispersion may be asymmetrical. Managers should consider dispersion a vital brand-management metric and add it to the brand-performance dashboard. Without modeling dispersion, brand rating's impact on firm value can be over- or underestimated. Moreover, dispersion tempers the risk-reduction benefits of higher brand rating in both the short run and long run. Furthermore, downside dispersion has a stronger impact on abnormal returns than upside dispersion, indicating an asymmetry in brand dispersion's effects. Brand dispersion has Januslike effects: it harms returns but reduces firm risk. Multiple analyses on 730,818 brand–day observations provide robust evidence that brand dispersion fluctuations affect stock prices. The higher the dispersion, the more inconsistent and polarized the brands’ cross-consumer ratings. Dispersion captures the covert heterogeneity in brand evaluations among consumers who like or dislike the brands, which would affect an investor's decision to buy or sell a stock. This study examines brand dispersion-variance in brand ratings across consumers-and its role in the translation of brand assets into firm value. All subjects Allied Health Cardiology & Cardiovascular Medicine Dentistry Emergency Medicine & Critical Care Endocrinology & Metabolism Environmental Science General Medicine Geriatrics Infectious Diseases Medico-legal Neurology Nursing Nutrition Obstetrics & Gynecology Oncology Orthopaedics & Sports Medicine Otolaryngology Palliative Medicine & Chronic Care Pediatrics Pharmacology & Toxicology Psychiatry & Psychology Public Health Pulmonary & Respiratory Medicine Radiology Research Methods & Evaluation Rheumatology Surgery Tropical Medicine Veterinary Medicine Cell Biology Clinical Biochemistry Environmental Science Life Sciences Neuroscience Pharmacology & Toxicology Biomedical Engineering Engineering & Computing Environmental Engineering Materials Science Anthropology & Archaeology Communication & Media Studies Criminology & Criminal Justice Cultural Studies Economics & Development Education Environmental Studies Ethnic Studies Family Studies Gender Studies Geography Gerontology & Aging Group Studies History Information Science Interpersonal Violence Language & Linguistics Law Management & Organization Studies Marketing & Hospitality Music Peace Studies & Conflict Resolution Philosophy Politics & International Relations Psychoanalysis Psychology & Counseling Public Administration Regional Studies Religion Research Methods & Evaluation Science & Society Studies Social Work & Social Policy Sociology Special Education Urban Studies & Planning BROWSE JOURNALS
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