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Type: Journal article
Title: Customer satisfaction as a buffer against sentimental stock-price corrections
Author: Merrin, R.
Hoffmann, A.
Pennings, J.
Citation: Marketing Letters, 2013; 24(1):13-27
Publisher: Springer
Issue Date: 2013
ISSN: 0923-0645
Statement of
Robert P. Merrin, Arvid O.I. Hoffmann, Joost M.E. Pennings
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.
Keywords: Customer satisfaction; investor sentiment; market-based assets; marketing-finance interface
Rights: © Springer Science+Business Media New York 2012
DOI: 10.1007/s11002-012-9219-9
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