Customer orientation and stock resilience during adversity periods

Panayiotis C. Andreou, Neophytos Lambertides, Lenos Trigeorgis and Ruslan Tuneshev

Journal of Corporate Finance, 2025, vol. 93, issue C

Abstract: Customer orientation reflects the organizational culture and climate that promote behaviors enabling the firm to create superior value for its customers. Using a textual measure of customer orientation (Custor) constructed from 10-K filings, we document a positive and economically significant relation between Custor and stock returns in the financial crisis of 2008–2009 and the COVID-19 pandemic. High-Custor firms outperform low-Custor firms by 1.5% per month during the financial crisis and by 4.7% per month during the COVID-19 crisis. This positive Custor-returns relation is robust to different treatments and persists after accounting for factors that contribute to corporate resilience, such as CSR activities. Our findings lend credence to the notion that customer orientation enhances a firm’s social capital, leading to improved operational performance during adverse periods, whilst our empirical evidence further supports that Custor and CSR represent distinct pathways for building trust. Consequently, firms that prioritize customer orientation experience greater resilience to negative shocks, especially during periods of low market confidence.

Keywords: Customer orientation; Stock returns; Corporate resilience; Trust; Financial crisis; COVID-19; Textual analysis; 10-K filings (search for similar items in EconPapers)
JEL-codes: G01 G11 G12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:93:y:2025:i:c:s0929119925000483

DOI: 10.1016/j.jcorpfin.2025.102780

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