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• Article | Journal of Economics & Management Strategy | Spring 2013

  Salience in Quality Disclosure: Evidence from the U.S. News College Rankings

  Michael Luca and Jonathan Smith

  How do rankings affect demand? This paper investigates the impact of college rankings, and the visibility of those rankings, on students' application decisions. Using natural experiments from U.S. News and World Report College Rankings, we present two main findings. First, we identify a causal impact of rankings on application decisions. When explicit rankings of colleges are published in U.S. News, a one-rank improvement leads to a 1-percentage-point increase in the number of applications to that college. Second, we show that the response to the information represented in rankings depends on the way in which that information is presented. Rankings have no effect on application decisions when colleges are listed alphabetically, even when readers are provided data on college quality and the methodology used to calculate rankings. This finding provides evidence that the salience of information is a central determinant of a firm's demand function, even for purchases as large as college attendance.

  Keywords: Rank and Position; Demand and Consumers; Quality; Decisions; Newspapers; United States;

  Citation:

  Luca, Michael, and Jonathan Smith. "Salience in Quality Disclosure: Evidence from the U.S. News College Rankings." Journal of Economics & Management Strategy 22, no. 1 (Spring 2013): 58–77.

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• Case | HBS Case Collection | 2012 (Revised from original 2012 version)

  RMS: Investing in Chinese Timberland

  Andre F. Perold

  The protagonist is considering acquiring a timber property located in rural China, a region where almost no timberland investment has taken place. The question is how to value the property, including understanding the appropriate risk-adjusted return.

  Keywords: China;

  Citation:

  Perold, Andre F. "RMS: Investing in Chinese Timberland." Harvard Business School Case 213-002, July 2012. (Revised from original July 2012 version.)

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• Case | HBS Case Collection | 2012 (Revised from original 2006 version)

  Kerr-McGee

  Robin Greenwood and Andre F. Perold

  Activist investors Carl Icahn and Barry Rosenstein acquire a stake in Oklahoma-based company Kerr-McGee. They demand two board seats and ask the company to make several operational and financial changes, including the repurchase of equity and divestiture of their chemicals business. The case protagonist, Luke Corbett, CEO, opposes these changes,

  Keywords: Restructuring; Chemicals; Equity; Investment; Governance Controls; Managerial Roles; Chemical Industry; Energy Industry; United States;

  Citation:

  Greenwood, Robin, and Andre F. Perold. "Kerr-McGee." Harvard Business School Case 207-020, July 2012. (Revised from original November 2006 version.)

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