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—The Stock Market's Pricing of Customer Satisfaction

Christopher Ittner (), David Larcker () and Daniel Taylor
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Christopher Ittner: The Wharton School of the University of Pennsylvania, Philadelphia, Pennsylvania 19104
David Larcker: Graduate School of Business, Stanford University, Stanford, California 94305

Marketing Science, 2009, vol. 28, issue 5, 826-835

Abstract: A number of recent marketing studies examine the stock market's response to the release of American Customer Satisfaction Index (ACSI) scores. The broad purpose of these studies is to investigate the stock market's valuation of customer satisfaction. However, a key focus is on whether customer satisfaction information predicts long-run returns. We provide evidence on the market's pricing of ACSI information using a more comprehensive set of well-established tests from the accounting and finance literatures. We find that ACSI scores provide some incremental information on future operating income and that the market quickly responds to the release of information on large increases in satisfaction. However, we find no evidence that ACSI predicts long-run returns. These results suggest that customer satisfaction information is value relevant, but they are also consistent with Jacobson and Mizik's conclusion [Jacobson, R., N. Mizik. 2009. The financial markets and customer satisfaction: Reexamining possible financial market mispricing of customer satisfaction. (5) 810–819] that mispricing of ACSI information, if present at all, is limited.

Keywords: customer loyalty; econometrics; stock valuation (search for similar items in EconPapers)
Date: 2009
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