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Do investments in intangible customer assets affect firm value?

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  • Golec, Joseph
  • Gupta, Neeraj J.

Abstract

This paper develops a simple model of investment by service firms in intangible customer assets, and tests whether the model identifies some critical drivers of firms’ stock returns. Similar to firms with significant research and development (R&D) expenditures, we argue that firms in fast-growing service industries with few tangible assets can increase firm value by investing in customer acquisition and service (A&S) expenditure. Using a unique hand-collected data set, we show that per-customer changes in firms’ revenues, customer acquisition costs, and customer service costs help to explain their abnormal stock returns.

Suggested Citation

  • Golec, Joseph & Gupta, Neeraj J., 2014. "Do investments in intangible customer assets affect firm value?," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(4), pages 513-520.
    • Handle: RePEc:eee:quaeco:v:54:y:2014:i:4:p:513-520
    DOI: 10.1016/j.qref.2014.06.002
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    References listed on IDEAS

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    Cited by:

    1. Viktoriya Stanimirova STANCHEVA, 2017. "Exploring The Effects Of Customer Portfolio Management," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 6(2), pages 1-14, July.

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    More about this item

    Keywords

    Customers; Valuation; Intangibles; Budgeting;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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