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VOLUNTARY DISCLOSURE AND EARNINGS EXPECTATIONS IN MULTI‐LEVEL MARKETING
Author(s) -
Bosley Stacie A.,
Greenman Sarah,
Snyder Samantha
Publication year - 2020
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12840
Subject(s) - earnings , voluntary disclosure , context (archaeology) , economics , marketing , business , accounting , paleontology , biology
Multi‐level marketing (MLM) firms recruit individuals into a business opportunity but are not required to disclose the earnings of past participants. Some MLMs voluntarily create income disclosures, which may serve both marketing and risk‐management functions. We create an economic experiment to explore the impact of MLM income disclosure on consumer interest and expectations. Results suggest that disclosure does not significantly alter interest in the business opportunity but does reduce expectations, on average, when subjects are asked to estimate annual income in a lab environment. We discuss findings in the context of current regulatory policy. ( JEL D18, D82, M38)