Customer satisfaction, earnings and firm value

2012 ◽  
Vol 46 (6) ◽  
pp. 827-843 ◽  
Author(s):  
Don O'Sullivan ◽  
John McCallig
Keyword(s):  
Customer Satisfaction ◽  
Firm Value

EXPRESS: Despite Efficiencies, M&As Reduce Firm Value by Hurting Customer Satisfaction

2021 ◽  
pp. 002224292110242
Author(s):  
Nita Umashankar ◽  
S. Cem Bahadir ◽  
Sundar Bharadwaj
Keyword(s):  
Customer Satisfaction ◽  
Firm Value ◽  
Negative Relationship ◽  
Dark Side ◽  
Executive Attention ◽  
Firm Efficiency ◽  
Upper Echelons Theory ◽  
Quasi Experimental ◽  
Customer Dissatisfaction ◽  
Investor Returns

Most researchers focus on the effect of mergers and acquisitions (M&As) on investor returns and overlook customer reactions, despite the fact that customers are directly impacted by these corporate transformations. Others suggest that in M&A contexts, a dual emphasis of customer satisfaction and firm efficiency is both likely and beneficial. In contrast, the authors demonstrate that M&As not only do not yield a dual emphasis but also cause a decline in customer satisfaction to the extent that it eclipses any gain in firm value from an increase in firm efficiency. A quasi-experimental difference-in-differences analysis and an instrumental variable panel regression provide robust evidence for the dark side of M&As for customers. The authors use the attention-based view of the firm to demonstrate that post-M&A customer dissatisfaction occurs because of a shift in executive attention away from customers and toward financial issues. In line with the related upper echelons theory, they find that marketing representation on firms’ board of directors helps maintain executive attention on customers, which mitigates the dysfunctional effect of M&As on customer satisfaction. This research identifies a negative M&A-customer satisfaction relationship and highlights executive attention to customer issues and marketing leadership as factors that mitigate this negative relationship.

scholarly journals Does Customer Satisfaction lead to an increased firm value?

2009 ◽  
Vol 1 (2) ◽  
pp. 8-15 ◽  
Author(s):  
Aksoy Lerzan ◽  
Bruce Cooil ◽  
Christopher Groening ◽  
Timothy L. Keiningham ◽  
Atakan Yalcin
Keyword(s):  
Customer Satisfaction ◽  
Firm Value ◽  
Cash Flows ◽  
Financial Measures ◽  
Satisfaction Index ◽  
Financial Valuation ◽  
American Customer Satisfaction Index ◽  
The Impact ◽  
Future Cash Flows

Abstract Does customer satisfaction really lead to increased firm value? Traditionally, most financial valuation models do not include customer-related metrics such as customer satisfaction in the process. Studies in marketing, on the other hand, have consistently found that customer satisfaction improves the ability to predict future cash flows, long-term financial measures, stock performance, and shareholder value. This research examines the impact that customer satisfaction has on firm value by employing valuation models borrowed directly from the practice of finance. The data used in the analysis is compiled by merging publicly available customer satisfaction data from the ACSI (American Customer Satisfaction Index) with financial data from COMPUSTAT, and Center for Research in Securities Prices between 1996 and 2006. The results indicate that a portfolio of stocks consisting of firms with high levels and positive changes in customer satisfaction will outperform lower satisfaction portfolios along with Standard & Poor’s 500… Customer satisfaction does matter!

scholarly journals AMBIVALENT IMPACT OF CUSTOMER SATISFACTION ON FIRM VALUE IN EMERGING MARKETS: THE CASE OF KOREA

2017 ◽  
Vol 18 (2) ◽  
pp. 258-272 ◽  
Author(s):  
Hyunseok KIM ◽  
Jaisang KIM ◽  
Kyeong-Seop CHOI
Keyword(s):  
Customer Satisfaction ◽  
Emerging Markets ◽  
Firm Value ◽  
Practical Implication ◽  
Emerging Market ◽  
Quantile Regressions ◽  
Theoretical Level ◽  
Satisfaction Index ◽  
Customer Satisfaction Index ◽  
American Customer Satisfaction Index

Many researchers report that American Customer Satisfaction Index relates significantly and positively to firm value. The purpose of this paper is to examine whether such relation holds in the emerging markets such as Korea. Our preliminary OLS analysis reports that Korean customer satisfaction is irrelevant to firm value. Quantile regressions, applied for further analysis, report that customer satisfaction can be detrimental to firm value if the firm is enjoying the higher kind of value. These results undermine efforts, on the theoretical level, to establish Customer Satisfaction Index as a consolidated firm-value indicator; furthermore, managerial efforts to boost up firm value by managing customer satisfaction lose ground in the emerging markets. This study also corroborates Reinartz and Kumar’s (2002) marketing insight that to satisfy customers, make them loyal, is trivial for profitability and firm value in Korea perspective. The practical implication of our finding is that the relation between customer satisfaction and firm value becomes more ambiguous, especially when it is considered in the emerging market contexts. It also provides management with a fresh new insight that they should take prudence when they increase expenses on customer satisfaction since it turned out to be not a “panacea”.

Does customer satisfaction matter to managers’ earnings forecasts and stock returns?

2018 ◽  
Vol 52 (9/10) ◽  
pp. 2026-2051 ◽  
Author(s):  
Jenny (Jiyeon) Lee ◽  
Youngdeok Lim ◽  
Hyung Il Oh
Keyword(s):  
Customer Satisfaction ◽  
Stock Returns ◽  
Firm Value ◽  
Earnings Forecasts ◽  
Management Forecasts ◽  
Management Earnings Forecasts ◽  
Marketing Metrics ◽  
Content Type ◽  
Study Results ◽  
The Impact

PurposeThe purpose of this study is to examine the relevance of American Customer Satisfaction Index (ACSI) to management voluntary forecasts of earnings. The authors further investigate whether the market reacts to such forecasts in respect of satisfaction.Design/methodology/approachThe authors’ econometric models are constructed from previous work in accounting to specify the effect of ACSI on the issuance and optimism of management forecasts. Our model also specifies the impact of management optimism with respect to ACSI on stock returns. The data consisting of US firms in the 2001-2010 is collated from several databases and analyzed using multiple regression procedures.FindingsResults indicate that ACSI is positively associated with the likelihood of issuing management forecasts and boosts management optimism. It is also found that investors react negatively to management optimism that is inherent in forecasts and results from satisfaction.Research limitations/implicationsThe authors’ research findings not only complement prior work on the linkage between customer satisfaction and firm value by incorporating a managerial perspective but also respond to the recent call for further work on how relevant marketing metrics drive organizational decisions and firms’ financial performance. It should be noted that findings are limited to firms that release both a voluntary issuance of management forecasts and ACSI.Practical implicationsThe study results shed light on the justification of marketing expenditures and provide a response to the call for marketing accountability. The study results also enable managers to make better decisions about whether and when to issue a forecast. The authors’ research further calls stakeholders’ attention to the presence of management forecast optimism with respect to satisfaction.Originality/valueDespite the importance of managers as primary information generators and disseminators in the capital markets, there appears to be little discussion on the satisfaction’s relevance to market participants, particularly in relation to the role of managers. Therefore, this investigation is the first to empirically show the relevance of ACSI to management earnings forecasts that have been ignored in the marketing literature.

EXPRESS: Shedding Light on the Dark Side of Firm Lobbying: A Customer Perspective

2021 ◽  
pp. 002224292110230
Author(s):  
Gautham G. Vadakkepatt ◽  
Sandeep Arora ◽  
Kelly D. Martin ◽  
Neeru Paharia
Keyword(s):  
Customer Satisfaction ◽  
Firm Value ◽  
Policy Implications ◽  
Dark Side ◽  
Use Of Resources ◽  
Disclosure Requirements ◽  
Current Thinking ◽  
Negative Effect ◽  
Managerial Implications ◽  
Customer Perspective

Firms spend a substantial amount on lobbying—devoting financial resources on teams of lobbyists to further their interests among regulatory stakeholders. Previous research acknowledges that lobbying positively influences firm value, but it has not examined the parallel effects for customers. Building on the attention-based view (ABV) of the firm, we examine these customer effects. Findings reveal that lobbying negatively affects customer satisfaction so that the positive relationship between lobbying and firm value is mediated by losses to customer satisfaction. These findings suggest a dark side of lobbying and challenge current thinking. However, several customer-focused moderators attenuate the negative effect of lobbying on customer satisfaction, predicted by ABV theory, including the CEO’s background (marketing vs. other functional area) and the firm’s strategic use of resources (advertising spending, R&D spending, or lobbying for product market issues). These moderators ensure consistency between lobbying and customer priorities or direct firm attention toward customers even while firms continue to lobby. Finally, we verify that lobbying reduces the firm’s customer focus by measuring this focus directly using text analysis of firm communications with shareholders. Collectively, the research provides managerial implications for navigating both lobbying activities and customer priorities, and public policy implications for lobbying disclosure requirements.

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