Do Contented Customers Make Shareholders Wealthy? - Implications of Intangibles for Security Pricing

73 Pages Posted: 9 Jan 2021

See all articles by Erik Theissen

Erik Theissen

University of Mannheim - Finance Area

Lukas Zimmermann

University of Mannheim - Finance Area

Date Written: November 17, 2020

Abstract

We explore the relation between customer satisfaction and security returns. Firms with high customer satisfaction levels earn significant abnormal returns. This result is robust to variations of model specification and test methodology. Additional tests do not reveal evidence of systematic mispricing. Our results rather suggest that there are, consistent with the model of Eisfeldt and Papanikolaou (2013), sources of risk not covered by standard risk factors. We identify firm characteristics, such as the Hoberg et al. (2014) product market fluidity measure, and macro variables, such as patenting activity and aggregate R&D spending, that are related to these sources of risk.

Keywords: Intangible Capital, Customer Satisfaction, Innovativity, ESG-Investing

JEL Classification: E22, G12, G14, M31

Suggested Citation

Theissen, Erik and Zimmermann, Lukas, Do Contented Customers Make Shareholders Wealthy? - Implications of Intangibles for Security Pricing (November 17, 2020). Available at SSRN: https://ssrn.com/abstract=3732675 or http://dx.doi.org/10.2139/ssrn.3732675

Erik Theissen (Contact Author)

University of Mannheim - Finance Area ( email )

Mannheim, 68131
Germany

Lukas Zimmermann

University of Mannheim - Finance Area ( email )

Mannheim, 68131
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
48
Abstract Views
286
PlumX Metrics