Customer Satisfaction, Analyst Stock Recommendations, and Firm Value

Luo, Xueming; Homburg, Christian; Wieseke, Jan
December 2010
Journal of Marketing Research (JMR);Dec2010, Vol. 47 Issue 6, p1041
Academic Journal
Although managers are interested in the financial value of customers and researchers have pointed out the importance of stock analysts who advise investors, no studies to date have explored the implications of customer satisfaction for analyst stock recommendations. Using a large-scale longitudinal data set, the authors find that positive changes in customer satisfaction not only improve analyst recommendations but also lower dispersion in those recommendations for the firm. These effects are stronger when product market competition is high and financial market uncertainty is large. In addition, analyst recommendations at least partially mediate the effects of changes in satisfaction on firm abnormal return, systematic risk, and idiosyncratic risk. Analyst recommendations represent a mechanism through which customer satisfaction affects firm value. Thus, if analysts pay attention to Main Street customer satisfaction, Wall Street investors should have good reason to listen and follow. Overall, this research reveals the impact of satisfaction on analyst-based outcomes and firm value metrics and calls attention to the construct of customer satisfaction as a key intangible asset for the investor community.


Related Articles

  • A Strong Start Is Best First Impression.  // American Banker;6/13/2011, Vol. 176 Issue 90, p10 

    The article considers remarks by Charles Bean, President of Heritage Financial Services, on how investment advisers should manage the adviser-client relationship, focusing on Bean's contention that the initial impression the adviser makes on a client is of vital importance.

  • Marketing Tricks of the Trade. Mellan, Olivia // Investment Advisor;Oct2015, Vol. 35 Issue 10, p51 

    The article offers marketing tips for investment advisors to reach out to their clients effectively and includes focusing communication on target client, sharing information within the niche and network regularly with referral sources.

  • Target Price Accuracy: International Evidence. Bilinski, Pawel; Lyssimachou, Danielle; Walker, Martin // Accounting Review;May2013, Vol. 88 Issue 3, p825 

    Using an international sample of 16 countries, this paper examines if analyst- and country-specific characteristics explain the variation in target price (TP) accuracy. We find that significant variation in average TP accuracy across countries is due to differences in accounting disclosure...

  • Cold Call Champions. GOOD, BILL // Research;Dec2012, Vol. 35 Issue 12, p53 

    The article offers the author's insights on some of his chosen cold calling scripts. He says that the cold walk script which was considered as the overall approach. He relates that the company employee script is seen to be a success, having a list of company staff. He suggests that in the last...

  • DEFINE AND CONQUER -- Marketing Strategically to Achieve Growth. de Pardo, Eliza; Inveen, Dan // Investment Advisor;Aug2011, Vol. 31 Issue 8, p38 

    The article discusses the effective practices in stimulating demand in investment advisor firms through the enhanced marketing capabilities. According to the advisory firms surveyed, that 18% of these firms do not consider their marketing plan as an effective tool in generating new clients. It...

  • Read all about it. McCarthy, Ed // Senior Market Advisor;Dec2011, Vol. 12 Issue 12, following p44 

    The article offers tips for investment advisors in the U.S. on how to attract publishers and prospective clients through the use of financial knowledge and writing skills on the senior-market advisory business. It suggests that advisors must consider strategies such as writing articles that...

  • Venturing Beyond Investments. LINDORFF, DAVE // On Wall Street;Dec2016, Vol. 26 Issue 12, p23 

    The article offers information on importance of building relationship with clients in wealth management. Topics discussed include holistic planning approach for increased reference without marketing efforts, expected personal interaction from clients according to the report "2016 Wealth...

  • Carpe Diem! A New Look at Life to Generate Sales for Business Owners. Rinn, Andrew J. // Journal of Financial Service Professionals;Nov2011, Vol. 65 Issue 6, p84 

    The business-owner market contains a number of opportunities for financial service professionals aware of the potential of this lucrative demographic. The key to success is seizing the opportunity by bringing forth unique solutions that help business owners achieve their goals

  • Pen Value Statements That Engage Clients. MOREY STETTNER // Investors Business Daily;2/17/2015, pA08 

    The article discusses the use of financial advisers of value statements as part of their marketing and to engage clients. Particular focus is given to a study by Bank of New York Mellon company, Pershing LLC, concerning how advisers compose value statements. The study reveals that advisers tend...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics