The Category-Demand Effects of Price Promotions
Marketing Science
Modeling Consumer Demand for Variety
Marketing Science
Competitive Reactions to Advertising and Promotion Attacks
Marketing Science
Strategic Pricing and Detailing Behavior in International Markets
Marketing Science
Structural Modeling in Marketing: Review and Assessment
Marketing Science
Customer Metrics and Their Impact on Financial Performance
Marketing Science
Using Online Conversations to Study Word-of-Mouth Communication
Marketing Science
Promotional Chat on the Internet
Marketing Science
Performance Regimes and Marketing Policy Shifts
Marketing Science
New Product Diffusion with Influentials and Imitators
Marketing Science
Retail-Price Drivers and Retailer Profits
Marketing Science
A Dynamic Model of the Effect of Online Communications on Firm Sales
Marketing Science
Editorial---People of Marketing Science
Marketing Science
Content Contributor Management and Network Effects in a UGC Environment
Marketing Science
Social Media and Firm Equity Value
Information Systems Research
Quantify sales impact of location-based advertising
International Journal of Mobile Communications
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This paper seeks to quantify the long-term financial impact of negative word of mouth (NWOM), an issue that has long challenged extant research. We do so with real-world data on firm security prices. The developed time-series models innovatively uncover (1) short-and long-term effects of NWOM on cash flows, stock returns, and stock volatilities, and (2) NWOM's “wear-in” effects (i.e., it takes a number of months before the stock price impact of NWOM reaches the peak point) and “wear-out” effects (i.e., it takes several months after the peak before the stock price impact of NWOM dies out completely). In addition, the results related to endogeneity and feedback effects from the stock market are also interesting, supporting the idea that historical underperformance in stock prices may breed more harmful future buzz in a “vicious” cycle of NWOM. After controlling for competition, NWOM's long-term financial harm becomes more destructive in magnitude, kicks in more quickly, and haunts investors longer. Overall, these findings offer some unique implications for buzz management, time-series models quantifying the financial impact of word of mouth, and the marketing-finance interface.