Multitasking, Information Disclosure, and Product Quality: Evidence from Nursing Homes

33 Pages Posted: 5 Jul 2012

See all articles by Susan F. Lu

Susan F. Lu

Purdue University - Krannert School of Management

Date Written: Fall 2012

Abstract

This paper uses a mandatory quality disclosure policy, the Nursing Home Quality Initiative (NHQI), to investigate how quality ‘report cards’ affect firms’ choices of multidimensional product quality. I show that after the introduction of NHQI: (1) scores of quality measures improve for the reported dimensions but deteriorate for the unreported ones; (2) there is no evidence that nursing homes decrease quality‐related inputs; (3) consumer demand becomes sensitive to changes in the NHQI quality measures. These findings are consistent with the multitasking hypothesis that firms may respond to information disclosure by reallocating effort across dimensions of quality without necessarily increasing overall quality.

Suggested Citation

Lu, Susan Feng, Multitasking, Information Disclosure, and Product Quality: Evidence from Nursing Homes (Fall 2012). Journal of Economics & Management Strategy, Vol. 21, Issue 3, pp. 673-705, 2012, Available at SSRN: https://ssrn.com/abstract=2100705 or http://dx.doi.org/10.1111/j.1530-9134.2012.00341.x

Susan Feng Lu (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

HOME PAGE: http://https://sites.google.com/site/susanluhome/home

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