Why do Movie Studios Produce R-rated Films?

Brian Goff, Dennis Wilson, David Zimmer

Abstract


R-rated films are correlated with lower box office revenues. Using sex and nudity content as an instrument to predict R-ratings, we show that R-ratings themselves are not the cause of lower revenues. Instead, R-rated films contain traits that lower revenues and the ratings act as a signal of those traits. Why do film producers include those traits and seek R-ratings? We show that R-ratings alter the shape of the distribution of critical reviews, shifting the distribution to the right. Moreover, even after controlling for other influences, R-ratings improve critical reviews, suggesting that producers not only seek box office revenues, but also critical acclaim.


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DOI: https://doi.org/10.11114/aef.v2i1.610

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Applied Economics and Finance    ISSN 2332-7294 (Print)   ISSN 2332-7308 (Online)

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