The Relationship Between Customer Equity and Market Value

Hsiu-Yuan Tsao () and Hsin-Yu Chao ()
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Hsiu-Yuan Tsao: National Chung Hsing University
Hsin-Yu Chao: National Chung Hsing University

A chapter in LISS 2014, 2015, pp 725-729 from Springer

Abstract: Abstract By investigating the connection between customer equity and market value, this paper seeks to bridge the growing information gap caused by an inability to recognize intangible assets such as customer equity. Customer equity was calculated using publicly available data of Netflix, E-trade and eBay from 2003 to 2012, including the number of new subscribers, the number of lost subscribers, cash flow from subscribers, retention rates, and acquisition rates. We propose a method to measure the relative contribution of customer equity to market value. Customer equity and an adjustment factor, called the customer equity index (market value over customer equity), were set as independent variables. The beta coefficient of customer equity and customer equity index are compared. The results of regression analysis indicate that customer equity alone were unable to reliably predict market value. However, the customer equity index along with customer equity did constitute a good predictor of market value.

Keywords: Intangible assets; Customer lifetime value; Customer equity; Market value; Internet business (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-662-43871-8_104

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DOI: 10.1007/978-3-662-43871-8_104

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