The Stock Market’s Pricing of Customer Satisfaction

Abstract

A numberof recent marketing studies examinethe stock market’s response tothe releaseof AmericanCustomer Satisfaction Index (ACSI) scores.The broad purposeofthese studies is to investigatethe stock market’s valuationof customer satisfaction. However, a key focus is on whethercustomer satisfaction information predicts long-run returns. We provide evidence onthe market’s pricing of ACSI information using a more comprehensive setof well-established tests fromthe accounting and finance literatures. We find that ACSI scores provide some incremental information on future operating income and thatthe market quickly responds tothe releaseof information on large increases in satisfaction. However, we find no evidence that ACSI predicts long-run returns.These results suggest thatcustomer satisfaction information is value-relevant, but are also consistent with Jacobson and Mizik’s (2009) conclusion that mispricing of ACSI information, if present at all, is limited.

Keywords: customer satisfaction

JEL Classification: M31