Acquisition of Customer Information and Corporate Decision Making

Abstract

This study examines whether and under what conditions customer data collected through mobile apps—primarily for marketing purposes—aids investing and operating decisions. We find that following the introduction of a mobile app, management earnings and revenue guidance is more accurate. After firms release a mobile app, firms exhibit less underinvestment in capital assets and less overinvestment in inventory, particularly when they have effective internal information systems and access to location and financial information about their customers. These findings are consistent with the notion that information obtained through mobile apps leads to improved forecasts of customer demand and thus more efficient investing and operating decisions. We also find that privacy regulations intended to protect customers restrict firms’ ability to access these efficiency gains.

Keywords: mobile apps, customer data, privacy, operating decisions, investing decisions

JEL Classification: G31, M41, D83