Customer Satisfaction, Analyst Stock Recommendations, and Firm Value

Journal of Marketing Research, 47(6), 1041-1058, 2010

19 Pages Posted: 4 May 2013

See all articles by Xueming Luo

Xueming Luo

Temple University

Christian Homburg

University of Mannheim - Department of Marketing; University of Melbourne - Department of Management and Marketing

Jan Wieseke

University of Marburg - Faculty of Psychology

Date Written: 2010

Abstract

Although managers are interested in the financial value of customers and researchers have pointed out the importance of stock analysts who advise investors, no studies to date have explored the implications of customer satisfaction for analyst stock recommendations. Using a large-scale longitudinal data set, the authors find that positive changes in customer satisfaction not only improve analyst recommendations but also lower dispersion in those recommendations for the firm. These effects are stronger when product market competition is high and financial market uncertainty is large. In addition, analyst recommendations at least partially mediate the effects of changes in satisfaction on firm abnormal return, systematic risk, and idiosyncratic risk. Analyst recommendations represent a mechanism through which customer satisfaction affects firm value. Thus, if analysts pay attention to Main Street customer satisfaction, Wall Street investors should have good reason to listen and follow. Overall, this research reveals the impact of satisfaction on analyst-based outcomes and firm value metrics and calls attention to the construct of customer satisfaction as a key intangible asset for the investor community.

Keywords: customer satisfaction, financial analysts, competition, marketing-finance interface, stock recommendations, return, risk

JEL Classification: M21, M31, G00, G12, L86, M00, M30, M14

Suggested Citation

Luo, Xueming and Homburg, Christian and Wieseke, Jan, Customer Satisfaction, Analyst Stock Recommendations, and Firm Value (2010). Journal of Marketing Research, 47(6), 1041-1058, 2010, Available at SSRN: https://ssrn.com/abstract=2260322

Xueming Luo (Contact Author)

Temple University ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

HOME PAGE: http://www.fox.temple.edu/mcm_people/xueming-luo/

Christian Homburg

University of Mannheim - Department of Marketing ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

University of Melbourne - Department of Management and Marketing

5th Floor Babel Building
Melbourne, Victoria 3010
Australia

Jan Wieseke

University of Marburg - Faculty of Psychology ( email )

Gutenbergstr. 18
35032 Marburg
Germany
06421 28 26598 (Fax)

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