Accounting Papers

Document Type

Journal Article

Date of this Version

9-2009

Publication Source

Marketing Science

Volume

28

Issue

5

Start Page

826

Last Page

835

DOI

10.1287/mksc.1090.0526

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. Marketing Sci. 28(5) 810–819] that mispricing of ACSI information, if present at all, is limited.

Keywords

customer loyalty, econometrics, stock valuation

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Date Posted: 27 November 2017

This document has been peer reviewed.