Customer satisfaction as a buffer against sentimental stock-price corrections

R.P. Merrin, A.O.I. Hoffmann, J.M.E. Pennings

Research output: Contribution to journalArticleAcademicpeer-review

9 Citations (Scopus)

Abstract

Abstract Previous research has shown that customer satisfaction is a market-based asset that can contribute to a firm’s value by increasing its stock-market returns, while simultaneously reducing the riskiness of these returns. This study contributes to the growing literature on the marketing–finance interface by examining the relationship between customer satisfaction and a type of risk that has not been previously studied in the marketing literature: the vulnerability of a firm’s stock price to the stock-market corrections that typically follow periods of high investor sentiment. The results show that customer satisfaction can function as a buffer against the risk of such sentimental stock-price movements and reduces their negative impact on a firm’s market value. In particular, we find that firms with higher (lower) levels of customer satisfaction exhibit smaller (greater) price corrections and higher returns after periods of high investor sentiment. Mark Lett (2013) 24:13–27 DOI 10.1007/s11002-012-9219-9 R. P. Merrin : A. O. I. Hoffmann : J. M. E. Pennings Keywords Customer satisfaction . Investor sentiment . Market-based assets . Marketing–finance interface
Original languageEnglish
Pages (from-to)13-27
JournalMarketing Letters
Volume24
Issue number1
DOIs
Publication statusPublished - 2013

Keywords

  • shareholder value
  • investor sentiment
  • market value
  • returns
  • risk
  • performance
  • share

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