Do investments in intangible customer assets affect firm value?

Joseph Golec and Neeraj J. Gupta

The Quarterly Review of Economics and Finance, 2014, vol. 54, issue 4, 513-520

Abstract: This paper develops a simple model of investment by service firms in intangible customer assets, and tests whether the model identifies some critical drivers of firms’ stock returns. Similar to firms with significant research and development (R&D) expenditures, we argue that firms in fast-growing service industries with few tangible assets can increase firm value by investing in customer acquisition and service (A&S) expenditure. Using a unique hand-collected data set, we show that per-customer changes in firms’ revenues, customer acquisition costs, and customer service costs help to explain their abnormal stock returns.

Keywords: Customers; Valuation; Intangibles; Budgeting (search for similar items in EconPapers)
JEL-codes: G12 G14 G31 M37 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:54:y:2014:i:4:p:513-520

DOI: 10.1016/j.qref.2014.06.002

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