Marc Fischer, from University of Cologne, will present his research.

Deceptive Reviews Destroy Value

Deceptive reviews are a widespread phenomenon at Amazon.com, Yelp.com, and other platforms and have attracted the interest of researchers across many fields. Prior research has largely focused on the effects at the disaggregate level of players such as Amazon retailers who commit review fraud. The authors extend this perspective to the aggregate level of publicly listed firms whose products might be unintentionally affected by review fraud initiated by independent Amazon retailers to promote their own business and ask whether deceptive product reviews on Amazon.com accumulate to an effect substantial enough to influence value creation for these companies. The analysis uses more than 14 million online reviews associated with ca. 650,000 products sold by 288 publicly listed firms via Amazon in the years 2004–2018. The authors find indeed evidence for a destroyed value of US$ 147m per firm and quarter, which shows for the first time that deceptive review activity imposes substantial costs on companies and the economy as a whole.