Selling reputation when going out of business


Hakenes, Hendrik ; Peitz, Martin


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URL: http://ub-madoc.bib.uni-mannheim.de/2691
URN: urn:nbn:de:bsz:180-madoc-26918
Document Type: Working paper
Year of publication: 2004
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject: 330 Economics
Classification: JEL: L15 L14 D82 D40 ,
Subject headings (SWD): Übernahme , Unternehmernachfolge , Corporate Identity , Immaterielles Wirtschaftsgut
Keywords (English): Reputation , ownership change , intangible assets , theory of the firm
Abstract: Is the reputation of a firm tradeable when the previous owner has to retire even though ownership change is observable? We consider a competitive market in which a share of owners must retire in each period. New owners, observing only recent profits, bid for the firms that are for sale. Customers are concerned with the owners' type, which reflects the quality of the good or service provided. When a customer observes an ownership change, he may have an incentive to switch to a different firm, even if his past experience was good. However, we show that, in equilibrium, customers believe that the new owner is also good. Hence reputation is tradeable, although ownership change is observable. In our model, reputation is an intangible asset, embodied in an attractive customer base. Firms with good owners sell at a premium.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Hakenes, Hendrik ; Peitz, Martin (2004) Selling reputation when going out of business. Open Access [Working paper]
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