Quantifying the Long-Term Impact of Negative Word of Mouth on Cash Flows and Stock Prices

  title={Quantifying the Long-Term Impact of Negative Word of Mouth on Cash Flows and Stock Prices},
  author={Xueming Luo},
  journal={Marketing Science},
T 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) shortand 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… CONTINUE READING
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