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The Value of Quality

Author

Listed:
  • Gerard J. Tellis

    (The Marshall School of Business, MC 0443, University of Southern California, Los Angeles, California 90089-0443)

  • Joseph Johnson

    (508 Kosar Epstein Building, Coral Gables, Florida 33146)

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 . 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.

Suggested Citation

  • Gerard J. Tellis & Joseph Johnson, 2007. "The Value of Quality," Marketing Science, INFORMS, vol. 26(6), pages 758-773, 11-12.
    • Handle: RePEc:inm:ormksc:v:26:y:2007:i:6:p:758-773
    DOI: 10.1287/mksc.1070.0286
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    References listed on IDEAS

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