How New Product Preannouncements Affect Stock-Listed Innovators: The Case of Book Adaptations

摘要

Stock-listed movie studios rely heavily on innovation and face millions in production costs for a new movie(Joshi and Hanssens,2009).As these high production costs coincide with a high uncertainty,whether the movie will be profitable due to its uniqueness,each innovation represents a profitability risk.Book adaptations(movies based on books)are a frequently used strategy to reduce these risks,as studios try to increase movie success by leveraging the book's equity(e.g.,fans of the book are also likely to watch the adaptation in the cinema;Knapp,Hennig-Thurau,and Mathys 2014).A long time before the release of the adaptation,movie studios use New Product Preannouncements(NPPs)to influence shareholders positively,i.e.,by signaling high innovative-ness and high success potential of the upcoming movies(Einav und Ravid 2009).However,many unprofitable book adaptations indicate that predicting their success is still a problem for shareholders and practitioners alike.