The Long Term Stock Market Valuation of Customer Satisfaction

Journal of Marketing, Forthcoming

48 Pages Posted: 14 Jan 2008

See all articles by Lerzan Aksoy

Lerzan Aksoy

Koc University

Bruce Cooil

Vanderbilt University - Statistics

Christopher Groening

University of Missouri at Columbia - Department of Marketing

Timothy L. Keiningham

Ipsos Loyalty - North America

Atakan Yalcin

Ozyegin University


Firm valuation has been an important domain of interest for finance. Most financial models, however, do not include customer-related metrics in this process. Studies in marketing have found that one particular customer metric, customer satisfaction, improves the ability to predict future cash flows, long-term financial measures, stock performance, and shareholder value. Most of these studies, however, predominantly employ models that are not directly used in finance practice. This paper extends existing literature by examining the impact of customer satisfaction on firm valuation by employing multiples and risk adjusted abnormal return models borrowed directly from the practice of finance. The data utilized includes 3,600 quarter-firm observations from the ACSI, COMPUSTAT, and CRSP databases from 1996 to 2006. The results indicate that purchasing a portfolio of stocks consisting of firms with high levels and positive changes in customer satisfaction will outperform the other three possible portfolio combinations (low levels and negative changes, low levels and positive changes, and high levels and negative changes in customer satisfaction) along with the S&P 500. Initially the stock market undervalues positive satisfaction information, yet the market adjusts in the long-term.

Keywords: customer satisfaction, firm valuation, stock returns, abnormal returns, financial models

JEL Classification: G11, G12, G14, M31

Suggested Citation

Aksoy, Lerzan and Cooil, Bruce and Groening, Christopher and Keiningham, Timothy L. and Yalcin, Atakan, The Long Term Stock Market Valuation of Customer Satisfaction. Journal of Marketing, Forthcoming, Available at SSRN:

Lerzan Aksoy

Koc University ( email )

Cayir Cad. No: 5 Istinye
Sariyer 80910, Istanbul, 34450

Bruce Cooil

Vanderbilt University - Statistics ( email )

Nashville, TN 37203
United States

Christopher Groening

University of Missouri at Columbia - Department of Marketing ( email )

College of Business
Columbia, MO 65211
United States

Timothy L. Keiningham (Contact Author)

Ipsos Loyalty - North America ( email )

Parsippany, NJ
United States

Atakan Yalcin

Ozyegin University ( email )

Nisantepe Mahallesi
Alemdag, Cekmekoy
Istanbul, 34794
+90-216-564-9587 (Phone)
+90-216-564-9045 (Fax)

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