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Customer satisfaction as a buffer against sentimental stock-price corrections

Author

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  • Robert Merrin
  • Arvid Hoffmann
  • Joost Pennings

Abstract

Previous research has shown that customer satisfaction is a market-based asset that can contribute to a firm’s value by increasing its stock-market returns, while simultaneously reducing the riskiness of these returns. This study contributes to the growing literature on the marketing–finance interface by examining the relationship between customer satisfaction and a type of risk that has not been previously studied in the marketing literature: the vulnerability of a firm’s stock price to the stock-market corrections that typically follow periods of high investor sentiment. The results show that customer satisfaction can function as a buffer against the risk of such sentimental stock-price movements and reduces their negative impact on a firm’s market value. In particular, we find that firms with higher (lower) levels of customer satisfaction exhibit smaller (greater) price corrections and higher returns after periods of high investor sentiment. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Robert Merrin & Arvid Hoffmann & Joost Pennings, 2013. "Customer satisfaction as a buffer against sentimental stock-price corrections," Marketing Letters, Springer, vol. 24(1), pages 13-27, March.
  • Handle: RePEc:kap:mktlet:v:24:y:2013:i:1:p:13-27
    DOI: 10.1007/s11002-012-9219-9
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    References listed on IDEAS

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    3. Joëlle Vanhamme & Valérie Swaen & Guido Berens & Catherine Janssen, 2015. "Playing with fire: aggravating and buffering effects of ex ante CSR communication campaigns for companies facing allegations of social irresponsibility," Marketing Letters, Springer, vol. 26(4), pages 565-578, December.
    4. 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.
    5. Dimitrios Drosos & Michalis Skordoulis & Garyfallos Arabatzis & Nikos Tsotsolas & Spyros Galatsidas, 2019. "Measuring Industrial Customer Satisfaction: The Case of the Natural Gas Market in Greece," Sustainability, MDPI, vol. 11(7), pages 1-16, March.

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