Customer Satisfaction, Analyst Stock Recommendations, and Firm Value
Year: 2010
Type: report
Abstract: Although managers are interested in the financial value of customers and researchers point \nout the importance of stock analysts who advise investors, no studies seem to have explored \nthe implications of customer satisfaction for analyst stock recommendations. On the basis of a \nlarge-scale longitudinal dataset, the authors find that positive changes in customer satisfaction \nnot only improve analyst recommendations but also lower dispersion in those \nrecommendations for the firm. These effects are stronger when product market competition is \nhigh and financial market uncertainty is large. Also, analyst recommendations at least \npartially mediate the effects of changes in satisfaction on firm abnormal return, systematic \nrisk, and idiosyncratic risk. Analyst recommendations represent a mechanism through which \ncustomer satisfaction affects firm value. Thus, if analysts pay attention to Main Street \ncustomer satisfaction, then Wall Street investors should have good reason to listen and follow. \nOverall, our research reveals satisfaction’s impact on analyst-based outcomes and firm value \nmetrics and calls attention to the construct of customer satisfaction as a key intangible asset \nfor the investor community.
Source: MADOC (University of Mannheim)
Authors: Xueming Luo, Christian Homburg, Jan Wieseke
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3126101420