The Stock Market’s Pricing of Customer Satisfaction

Marketing Science, Vol. 28, No. 5, pp. 826-835, September-October 2009

Rock Center for Corporate Governance at Stanford University Working Paper No. 62

27 Pages Posted: 8 Jul 2009 Last revised: 20 Nov 2011

See all articles by Christopher D. Ittner

Christopher D. Ittner

University of Pennsylvania - Accounting Department

David F. Larcker

Stanford University - Graduate School of Business

Daniel J. Taylor

Wharton School, University of Pennsylvania

Date Written: June 16, 2009

Abstract

A numberof recent marketing studies examinethe stock market’s response tothe releaseof AmericanCustomer Satisfaction Index (ACSI) scores.The broad purposeofthese studies is to investigatethe stock market’s valuationof customer satisfaction. However, a key focus is on whethercustomer satisfaction information predicts long-run returns. We provide evidence onthe market’s pricing of ACSI information using a more comprehensive setof well-established tests fromthe accounting and finance literatures. We find that ACSI scores provide some incremental information on future operating income and thatthe market quickly responds tothe releaseof information on large increases in satisfaction. However, we find no evidence that ACSI predicts long-run returns.These results suggest thatcustomer satisfaction information is value-relevant, but are also consistent with Jacobson and Mizik’s (2009) conclusion that mispricing of ACSI information, if present at all, is limited.

Keywords: customer satisfaction

JEL Classification: M31

Suggested Citation

Ittner, Christopher D. and Larcker, David F. and Taylor, Daniel, The Stock Market’s Pricing of Customer Satisfaction (June 16, 2009). Marketing Science, Vol. 28, No. 5, pp. 826-835, September-October 2009; Rock Center for Corporate Governance at Stanford University Working Paper No. 62. Available at SSRN: https://ssrn.com/abstract=1430652

Christopher D. Ittner (Contact Author)

University of Pennsylvania - Accounting Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-7786 (Phone)
215-573-2054 (Fax)

David F. Larcker

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Daniel Taylor

Wharton School, University of Pennsylvania ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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