Empirical Evidence of the Stock Market's (Mis)Pricing of Customer Satisfaction

International Journal of Research in Marketing, Vol. 26, pp. 154-161, 2009

Posted: 10 Aug 2009

See all articles by Don O'Sullivan

Don O'Sullivan

University of Melbourne - Melbourne Business School

Mark C. Hutchinson

University College Cork

Vincent O'Connell

University of Amsterdam Business School

Date Written: July 31, 2009

Abstract

Recent portfolio studies provide conflicting evidence on whether the stock market (mis)prices the value of customer satisfaction, as measured by the American Customer Satisfaction Index (ACSI), and whether ACSI-based trading strategies provide market-beating returns. The current research aims to shed new light on these issues.We reexamine two ACSI-based trading strategies considered in prior research. Applying a methodology that deals with three interlinking issues, risk adjustment, abnormal returns estimation and portfolio aggregation, we find that the trading strategies do not provide compelling evidence that the market mis-prices the value of customer satisfaction. Our study contributes to the current debate on the (mis)pricing of customer satisfaction by demonstrating the application of a framework within which the robustness of observed anomalies can be more fully assessed.

Keywords: customer satisfaction, firm value, mis-pricing, risk

Suggested Citation

O'Sullivan, Don and Hutchinson, Mark C. and O'Connell, Vincent, Empirical Evidence of the Stock Market's (Mis)Pricing of Customer Satisfaction (July 31, 2009). International Journal of Research in Marketing, Vol. 26, pp. 154-161, 2009, Available at SSRN: https://ssrn.com/abstract=1441853

Don O'Sullivan (Contact Author)

University of Melbourne - Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

Mark C. Hutchinson

University College Cork ( email )

O'Rahilly Building
College Road
Cork
Ireland

Vincent O'Connell

University of Amsterdam Business School ( email )

Plantage Muidergracht 12
Amsterdam, 1018TV
Netherlands

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