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Customer satisfaction and corporate investment policies

Author

Listed:
  • Lai Van Vo
  • Huong Thi Thu Le
  • Danh Vinh Le
  • Minh Tuan Phung
  • Yi-Hsien Wang
  • Fu-Ju Yang

Abstract

This paper examines the effect of satisfaction with firms’ products and services on their capital investment policies. Using data from the American Customer Satisfaction Index from 1994 to 2013, the results of the regression models show that firms with higher customer satisfaction will invest more heavily in capital expenditures in the future. The results further show that this positive effect is more pronounced for firms with less growth opportunities or a high cost of capital. This would include those firms with low market-to-book ratios, young and small firms, or firms in more competitive industries. Overall, this study argues that customer satisfaction is an important factor affecting the firm’s investment policy. The findings provide a better understanding of the role of customer satisfaction which can generate growth opportunities, reduce cost and motivate a firm to invest more in capital.

Suggested Citation

  • Lai Van Vo & Huong Thi Thu Le & Danh Vinh Le & Minh Tuan Phung & Yi-Hsien Wang & Fu-Ju Yang, 2017. "Customer satisfaction and corporate investment policies," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(2), pages 202-223, March.
    • Handle: RePEc:taf:jbemgt:v:18:y:2017:i:2:p:202-223
    DOI: 10.3846/16111699.2017.1280845
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    Cited by:

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    3. Benjasak, Chonlakan & Bhattarai, Keshab, 2017. "General Equilibrium Impacts VAT and Corporate Tax in Thailand," MPRA Paper 88816, University Library of Munich, Germany, revised 01 Jul 2018.
    4. Ki-Kwang Lee & In-Gyum Kim, 2020. "Social Media Data Analytics to Enhance Sustainable Communications between Public Users and Providers in Weather Forecast Service Industry," Sustainability, MDPI, vol. 12(20), pages 1-13, October.

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