Analyst Forecast Revision and Market Sales Discovery
of Online Word of Mouth
by Nan HU
| Speaker: |  |
Date: Time: Venue: |
29 March 2007 (Thursday)
|
Nan HU |
We look forward to seeing you at this research seminar. |
Abstract
Online word-of-mouth (WOM) communication in the form of product reviews, such as those provided by consumers who have previously purchased a product, has become a major information source for consumers and marketers about a product’s quality. The literature has shown a positive correlation between the review scores and product sales. This study extends previous work by conducting a more compelling test of the effect of online reviews on sales by considering both quantitative and qualitative aspects of online review, such as reviewer quality, reviewer exposure, product coverage and temporal effects. We use an innovative portfolio approach to assess efficiency of the online review markets. We show that consumers react to positive changes more favorably than for negative changes in review scores. Furthermore, consumers not only pay attention to the review score, but they also consider other contextual information such as a reviewer’s reputation and reviewer exposure. Market responds more favorably to a review written by a reviewer with better reputation and higher exposure. Finally, we demonstrate that the longer an item has been released to the market, the smaller the impact of online review on its sales suggesting that firms need not provide incentives for encouraging reviews for products after a certain release date.
Biography
Nan HU is an Assistant Professor of Information Systems at the Singapore Management University. He received his Ph.D. in management information systems from the University of Texas at Dallas. His research interests include intangible valuation of IT spending, IT human capital, security investment, and marketing impact of online word-of-mouth communities.