ABSTRACT Title of Dissertation: INFORMATION EXCHANGE IN THE MARKETPLACE: TWO ESSAYS ON FIRM STRATEGIES AND STAKEHOLDER PERCEPTIONS

Title of Dissertation: INFORMATION EXCHANGE IN THE MARKETPLACE: TWO ESSAYS ON FIRM STRATEGIES AND STAKEHOLDER PERCEPTIONS Michael Donald Pfarrer, Doctor of Philosophy, 2007 Dissertation directed by: Professor Violina P. Rindova Department of Management & Organization This dissertation consists of two essays that examine the role of information exchange in the marketplace and how firm strategies shape stakeholder perceptions of this information. In Essay 1, I develop a theoretical framework of Perceived Information Quality (PIQ), the extent to which stakeholders consider information useful in their evaluations of firm behavior. As PIQ increases, stakeholders’ information asymmetry and evaluation costs decrease, thereby potentially leading to more transactions between the firm and its stakeholders, greater access to resources for the firm, and ultimately, a greater probability of the firm achieving economic success. However, stakeholders may perceive certain types of information about the firm to be more useful than others, depending on whether the firm is engaging in conforming or non-conforming behavior and whether information about these behaviors is received directly or through a mediated channel. Essay 2 looks at the relationships among firm intangible assets, investor perceptions, and financial outcomes. In Chapter 1, I examine the influence of firm reputation and celebrity on the likelihood of the firm announcing either a positive or negative earnings surprise. In Chapter 2, I examine the impact of reputation and celebrity on investors’ reactions to the surprise announcement. Using a matched sample of 291 firms over a 15-year period, results show support for financial reputation decreasing the likelihood of positive and negative surprises, whereas one measure of firm celebrity, strategic deviance, predicts an increase only in the likelihood of negative surprises. Two additional celebrity measures, visibility and positive emotion, predict a greater likelihood of positive surprises and a lower likelihood of negative surprises respectively. In addition, results of post-hoc paired t-tests among six firm categories that group firms according to varying combinations of intangible assets show that reputation and visibility enhanced the returns of firms’ announcing positive earnings surprises, but only reputation provided a buffer for negative surprises. Tests also showed that firms high in both reputation and visibility performed worst among the six groups. Thus, certain levels of reputation or visibility may enhance investor perceptions of the firm amid deviant behavior, but high levels of both may not. INFORMATION IN THE MARKETPLACE: TWO ESSAYS ON FIRM STRATEGIES AND STAKEHOLDER PERCEPTIONS by Michael Donald Pfarrer Dissertation submitted to the Faculty of the Graduate School of the University of Maryland, College Park in partial fulfillment of the requirements for the degree of Doctor of Philosophy 2007