Abstract
We empirically analyze disclosure decisions made by 240 MBA programs about which rankings to display on their websites. We present three main findings. First, consistent with theories of countersignaling, top schools are least likely to disclose their rankings, whereas mid-ranked schools are most likely to disclose. Second, schools that do poorly in the U.S. News rankings are more likely to disclose their Princeton Review certification, suggesting that schools treat different certifications as substitutes. Third, conditional on displaying a ranking, the majority of schools coarsen information to make it seem more favorable. The stark patterns in the data help to provide empirical evidence on the strategic elements of voluntary disclosure and marketing decisions.
Highlights
One of the most well-known theories of voluntary disclosure relates to an idea known as information unraveling (Grossman 1981, Milgrom 1981, Jovanovic 1982)
Considering a setting in which there is a single dimension of product quality, these models argue that organizations will disclose information about their quality if disclosure costs are low and the information is favorable
We find that disclosure decisions are non-monotonic as a function of a school’s rank: top schools are least likely to display their rankings, mid-ranked schools are most likely to display their rankings, and bottom-ranked schools fall in between
Summary
One of the most well-known theories of voluntary disclosure relates to an idea known as information unraveling (Grossman 1981, Milgrom 1981, Jovanovic 1982). We find that schools that have a branded name, as measured by the count of mentions in the New York Times, are less likely to disclose rankings on their website, which provides further evidence consistent with consumers’ priors from competing signals influence whether a school discloses information Beyond these main results, we consider two other features that are common to many disclosure settings but are not captured in the basic unraveling result. We compile a set of U.S business schools that are ranked in a number of different sources, as we refer to them, including U.S News & World Report (USNWR), Bloomberg Business Week, Princeton Review, The Economist, Forbes, and The Financial Times. These measures, with relatively high means, represent a measure of potential exposure to information about a school
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