Does Customer Satisfaction Influence the Relationship between Earnings and Firm Value?

Marketing Letters, Forthcoming

Posted: 5 Aug 2009

See all articles by Don O'Sullivan

Don O'Sullivan

University of Melbourne - Melbourne Business School

John McCallig

University College Dublin (UCD) - Michael Smurfit Graduate School of Business

Date Written: August 2, 2009

Abstract

The aim of this study is to examine the influence of customer satisfaction on the stock market’s response to current earnings. The study extends prior research on the value relevance of customer satisfaction to include the direct and indirect effect of customer satisfaction on firm value. Utilizing an earnings based valuation model and data from the American Customer Satisfaction Index (ACSI) and COMPUSTAT, the study shows that both satisfaction and the interaction between earnings and satisfaction have a significant influence on firm value. Stock market participants are sensitive to changes in customer satisfaction and this is reflected in the market’s responsiveness to earnings performance.

Keywords: customer satisfaction, earnings, stock market, firm value

Suggested Citation

O'Sullivan, Don and McCallig, John, Does Customer Satisfaction Influence the Relationship between Earnings and Firm Value? (August 2, 2009). Marketing Letters, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1442962

Don O'Sullivan (Contact Author)

University of Melbourne - Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

John McCallig

University College Dublin (UCD) - Michael Smurfit Graduate School of Business ( email )

Department of Accountancy
Blackrock, Co. Dublin
Ireland

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