Consumer Negative Voice and Firm-Idiosyncratic Stock Returns

Journal of Marketing, 71 (3), 75-88, 2007

15 Pages Posted: 4 May 2013

Date Written: 2007


Prior research has largely focused on the positive side of customer experience, such as satisfaction. In contrast, this study investigates the negative side of customer experience and tests the harmful impact of consumer negative voice on firms’ stock returns. Based on a longitudinal real-world data set that matches consumer negative voice (complaint records) in the airline industry with firm stock prices, this article finds that higher levels of current consumer negative voice harm firms’ future idiosyncratic stock returns. In addition, this harmful impact is robust (albeit different across airline companies) after latent heterogeneity and traditional finance fundamentals are considered. These findings enable marketers and corporate financers to be more confident with customer equity theory and customer relationship management. In addition, armed with “hard” data (record-based, longitudinal), this research helps relieve criticisms against prior studies that are based on “soft” data (survey-based, cross-sectional). To financial analysts, this research suggests that, all else being equal, they should rate downward the stocks of firms that are shadowed by harmful consumer negative voice. In today’s high-tech environment with blogs and online forums, the damage caused by negative voice may be nontrivial and should not be ignored. Overall, this research demonstrates to managers that investments in reducing consumer negative voice could indeed make financial sense in terms of promoting firm-idiosyncratic stock returns.

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

Suggested Citation

Luo, Xueming, Consumer Negative Voice and Firm-Idiosyncratic Stock Returns (2007). Journal of Marketing, 71 (3), 75-88, 2007, Available at SSRN:

Xueming Luo (Contact Author)

Temple University ( email )

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


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