Assessing the Value-Relevance of Customer Satisfaction

Making use of the efficient markets hypothesis as a starting point for analysis, we outline an approach for assessing financial value-relevance of marketing metrics. We illustrate the approach by investigating the association between information contained in the American Customer Satisfaction Index (ACSI) customer satisfaction metric and stock market performance. Our findings differ from previous research in that the methodological approach we use, while nesting other models, incorporates a number of efficient market considerations that previous research has not taken into account, e.g., issues ranging from unmodeled autocorrelation, to risk adjustments, to using the unanticipated component of a series in financial market analysis. We find evidence supportive of satisfaction having value-relevance. However, the ACSI metric provides statistically significant incremental value-relevance to accounting measures only for firms in the computer/Internet sector. For other sectors, i.e., the majority of firms in the sample, unanticipated changes in satisfaction do not provide statistically significant incremental information to accounting measures in explaining stock returns.

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