Customer Satisfaction and Internal Control

Journal of Management Accounting Research

55 Pages Posted: 21 Jul 2023 Last revised: 18 Aug 2023

See all articles by Ting Chen

Ting Chen

University of Massachusetts Boston - College of Management

Xiaotao Kelvin Liu

DMSB - Accounting

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance

Yakun Wang

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics; Shenzhen Finance Institute

Date Written: January 12, 2023

Abstract

We investigate whether customer satisfaction, measured by product ratings on Amazon.com, is associated with ineffective internal control over financial reporting. Internal control weakness will likely corrupt the information environment, compromise coordination, and divert corporate resources from improving customer satisfaction to addressing control deficiencies. Using a large sample of product rating data from Amazon.com, we find robust and consistent evidence that customer satisfaction is negatively associated with internal control weaknesses. Furthermore, the negative association is more pronounced for environment-level (versus other) internal control weaknesses, non-core (versus core) products, and more (versus less) operationally complex firms. Overall, our findings provide the direct evidence that ineffective internal control compromises customer satisfaction.

Keywords: customer satisfaction, internal control weakness, product ratings, Amazon.com, operating complexity

Suggested Citation

Chen, Ting and Liu, Xiaotao Kelvin and Wan, Chi and Wang, Yakun, Customer Satisfaction and Internal Control (January 12, 2023). Journal of Management Accounting Research, Available at SSRN: https://ssrn.com/abstract=3969354 or http://dx.doi.org/10.2139/ssrn.3969354

Ting Chen

University of Massachusetts Boston - College of Management ( email )

Boston, MA
United States

Xiaotao Kelvin Liu (Contact Author)

DMSB - Accounting ( email )

404B Hayden Hall
360 Huntington Avenue
Boston, MA 02115
United States
617-373-5926 (Phone)

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance ( email )

Boston, MA 02125
United States

Yakun Wang

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics ( email )

2001 Longxiang Road, Longgang District
Shenzhen, 518172
China

Shenzhen Finance Institute ( email )

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