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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 | 2013 (Revised from original 2012 version)

  Olympus (A)

  Jay W. Lorsch, Suraj Srinivasan and Kathleen Durante

  As 2012 approached, the woes of the financial crisis seemed to be fading, companies were resuming business as usual, and some of the scrutiny on corporate governance practices began to recede as well. That is until another major financial scandal emerged in Japan in the fall of 2011. It was slowly revealed that the 92-year-old camera and medical photo-imaging company, Olympus, had been hiding its losses for more than a decade—to the tune of $1.7 billion—long before the current economic pressures, slow job growth, and poor investor confidence plagued the global economy. The fraud renewed the focus on corporate governance policies worldwide, but especially in Japan, where the lack of board independence and a deep-rooted corporate culture entrenched in personal loyalties fostered an environment that made it difficult for scandals such as this to be unveiled, let alone for whistleblowers to come forward about them.

  Keywords: accounting; corporate governance; Accounting; Corporate Governance; Electronics Industry; Health Industry; Japan;

  Citation:

  Lorsch, Jay W., Suraj Srinivasan, and Kathleen Durante. "Olympus (A)." Harvard Business School Case 413-040, March 2013. (Revised from original October 2012 version.)

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• Teaching Plan | HBS Case Collection | 2013

  The American National Red Cross (TP)

  Jay W. Lorsch and Michael Norris

  Citation:

  Lorsch, Jay W., and Michael Norris. "The American National Red Cross (TP)." Harvard Business School Teaching Plan 413-021, January 2013.

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