Open AccessQuality Signal Impacts on Firm Level Production: Evidence from the Beer Industry
Author(s) -
Mitch Kunce
Publication year - 2021
Language(s) - English
DOI - 10.47260/bej/1012
Subject(s) - medal , expansive , quality (philosophy) , signal (programming language) , production (economics) , exploit , panel data , economics , computer science , econometrics , marketing , microeconomics , business , computer security , history , philosophy , epistemology , materials science , compressive strength , programming language , composite material , art history
The intuitive nature of signaling theory in part helps explain its pervasiveness. The usefulness of a signal depends on the extent to which the signal corresponds with the sought after quality of the signaler. Herein, we examine a singular quality signal from the beer industry-winning a coveted Great American Beer Festival (GABF) medal. To provide an assessment of the quantitative impact of winning a GABF medal, this paper exploits a unique and expansive unbalanced panel of time-series, cross-section data from 1989-2012. Firm specific production changes are merged with the GABF medal winner database. Results from a two-way fixed-effects specification finds no significant relationship between winning a GABF medal or medals and changes in a brewery's output. Interestingly, it appears that the GABF quality signal applies more to the brewer than the brewery. JEL classification numbers: D12, L81, M31.Keywords: Quality signals, production, information asymmetry.