Multitasking, Information Disclosure and Product Quality: Evidence from Nursing Homes

Abstract

This paper uses a quality mandatory disclosure policy, the Nursing Home Quality Initiative (NHQI), to investigate how quality "report cards" affect firms' choices of multidimensional product quality. I show that after the introduction of NHQI: (1) the proportion of effort allocated to unreported dimensions decreases; (2) quality improves insignificantly along the reported dimensions, but deteriorates along the unreported ones; (3) there is no evidence that nursing homes increase quality-related inputs. These findings are consistent with the multitasking hypothesis that, rather than increasing effort for quality improvement, firms may respond to information disclosure by reallocating effort across dimensions of quality.

Keywords: Multitasking, Information Disclsoure, Quality

JEL Classification: L15, I18, L20