Quality Disclosure and Certification Theory and Practice
➤ Gửi thông báo lỗi ⚠️ Báo cáo tài liệu vi phạmNội dung chi tiết: Quality Disclosure and Certification Theory and Practice
Quality Disclosure and Certification Theory and Practice
Quality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practiceforthcoming the Journal of Economic LiteratureAbstractThis essay reviews the theoretical and empirical literature on quality disclosure and certification. After comparing quality disclosure with other quality assurance mechanisms and describing a brief history of quality disclosure, we address two s Quality Disclosure and Certification Theory and Practiceets of theoretical issues. First, why don’t sellers voluntarily disclose through a process of "unraveling and given the lack of unraveling, is it desiQuality Disclosure and Certification Theory and Practice
rable to mandate seller disclosure? Second, when we rely on certifiers to act as the intermediary of quality disclosure, do certifiers necessarily repQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practiceance. The empirical review covers quality measurement, the effect of third party disclosure on consumer choice and seller behavior, as well as the economics ofcertifiers.I. IntroductionA young couple expecting their first child might consult healthgrades.com hospital rankings to help choose where to Quality Disclosure and Certification Theory and Practice deliver their baby. A year later, the couple decides they need an SUV and consults performance specifications provided by manufacturers and reads ConQuality Disclosure and Certification Theory and Practice
sumer Reports to learn about reliability. Soon thereafter, the couple obtains test score results from several school districts to help choose where toQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practicelege, they plan for retirement by investing in AAA-rated corporate bonds and browse through Medicare's Nursing Home Compare to help plan for their parents’ final years.Literally from cradle to grave, consumers rely on quality disclosure to make important purchases. Although disclosure has a long his Quality Disclosure and Certification Theory and Practicetory that we describe below, it has attracted considerable attention in the past few years, especially in the areas of healthcare, education, and finaQuality Disclosure and Certification Theory and Practice
nce. Quality reporting is a key component of the recently enacted healthcare reform legislation. The No Children Left Behind initiative relies on testQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practicenting for the recent crisis on Wall Street has been directed at corporate bond rating agencies that seemed to ignore systematic risk while giving firms clean bills of health. Many policy analysts in these and other industries believe that we need more and better disclosure.In this essay, we review t Quality Disclosure and Certification Theory and Practicehe theoretical and empirical literature on disclosure. Section I compares quality disclosure with other quality assurance mechanisms and offers a brieQuality Disclosure and Certification Theory and Practice
f history' of disclosure. In section II, we address two sets of theoretical issues: first, why don't sellers voluntarily disclose through a process ofQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practiceact2as an intermediary of quality disclosure, do certifiers necessarily report unbiased and accurate information? Section III discusses empirical evidence on disclosure with a particular locus on healthcare. education, and finance. We begin with a practical question: How is quality measured and repo Quality Disclosure and Certification Theory and Practicerted? We then present evidence that unraveling often does not cx:cur in practice, thereby creating a need lor third party disclosure. We review whetheQuality Disclosure and Certification Theory and Practice
r third parly disclosure helps consumers make better choices and whether it encourages sellers to improve quality'. We also identify situations where Quality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practiceg the behavior of certifiers. Section IV concludes with suggestions for further research.1.1 Disclosure versus other quality assurance mechanismsWe define quality disclosure as an effort by a certification agency to systematically measure and report product quality for a nontrivial percentage of pro Quality Disclosure and Certification Theory and Practiceducts in a market. While we are mainly interested in third-party disclosure, we also include direct quality disclosure bysellers, provided that the diQuality Disclosure and Certification Theory and Practice
sclosed information can be independently verified. This definition distinguishes disclosure from broader marketing efforts by sellers that do not contQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practice such as Angie’s List where individuals share word-oi-mouth reviews of local service providers without systematic editing and scoring, rhe latter distinction is admittedly blurry; ratings sue h as Amazon.com’s customer reviews have elements of both a “town square” forum and a systematic report card. Quality Disclosure and Certification Theory and PracticeQuality disclosure can take many forms. Sellers may voluntarily report product attributes. For example, a hospital may disclose that the majority of iQuality Disclosure and Certification Theory and Practice
ts medical staff is board certified. Or an auto manufacturer may report performanc e specific ations. An industry- concerned about the3lemons problem Quality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practicelthcare Organizations (JCAHO), which reports the frequency of “sentinel events” (instances of poor quality) at member hospitals; and the Motion Picture Association of America, which is responsible for the familiar G/PG/PG-13/R/NC-17 movie rating system. In these cases, sellers have the choice of dis Quality Disclosure and Certification Theory and Practiceclosing or not disclosing quality information via the certification agency. Those that choose to disclose often pay a fee to cover the cost of certifiQuality Disclosure and Certification Theory and Practice
cation.Many industries face mandator}' disclosure, whereby a regulatory body requires sellers to disclose certain product attributes in a standard forQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practicethe results to U.S. Environmental Protection Agency). In other cases, government officials inspect the product on site (e.g. a local health board inspects restaurant hygiene). Mandatory disclosure often focuses on health and safety issues and ignores other product attributes that might influence dem Quality Disclosure and Certification Theory and Practiceand. For example, the U.S. Food and Drug Administration requires food manufacturers to report nutritional information but does not evaluate taste. InQuality Disclosure and Certification Theory and Practice
recent years, U.S. government agencies have expanded disclosure to include many other factors that can influence demand, including mortality rates forQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practiceplans. There are similar disclosure requirements in many other nations. The targeted audience has also shifted from government officials who might fine or even shut down a business that failed inspection to the consumers whose demands will determine the fate of low scoring firms. By posting results Quality Disclosure and Certification Theory and Practiceonline and publicizing them through the media, government certifiers hope to ensure that consumers can access the disclosed information with little coQuality Disclosure and Certification Theory and Practice
st and in a timely manner.4In addition to industry-sponsored voluntary disclosure and government-enforced mandatory disclosure, many private third-parQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practicegs, Moody's bond ratings, Consumer Reports' evaluation of consumer products, and U.S. News & World Report’s ranking of colleges. Some of these third-parties (e.g. Leapfrog) must obtain data directly from sellers and therefore require seller participation. Others may use public information (e.g., U.S Quality Disclosure and Certification Theory and Practice News) to evaluate the products and do not require seller participation. In some cases, certifiers may be financially affiliated with sellers, introduQuality Disclosure and Certification Theory and Practice
cing a conflict of interest. Slock analysts working for a brokerage firm that underwrites initial public offerings are often cited as an example of suQuality Disclosure and Certification: Theory and PracticeDavid Dranove (Northwestern University) Ginger zhe Jin (University of Mary land & NBER)40269f Quality Disclosure and Certification Theory and Practiceality assurance" mechanisms, though in some cases they provide information about horizontal product attributes rather than vertical quality dimensions. Table 1 gives examples of the mechanisms used to help assure quality in a wide array of markets. All of these markets can be considered credence goo Quality Disclosure and Certification Theory and Practiceds and many are experience goods, in that consumers may find it difficult to evaluate quality of all of these goods prior to purchase but may be ableQuality Disclosure and Certification Theory and Practice
to assess quality of some of them after purchase.Table 1 about hereAs suggested by Table 1, brand and experience are perhaps the most common quality aGọi ngay
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