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

  • Picking winners. Davis, Lisa // Business North Carolina;Dec93, Vol. 13 Issue 12, p24 

    Focuses on stocks which a selected panel of investment analysts predict will be gainers in 1994. Choices by: `Dick Austin; John W. Davis III; Craig Dickson; James J. Green; John `Buddy' Howard; Gerry Smith; Stuart F. Vaughn; Frederick J. Whitney; How 1992's stocks fared.

  • The shape of things to come~2. Beckman, Bob // Accountancy;Mar1975, Vol. 86 Issue 979, p74 

    Discusses the use of chart analysis to predict stock prices. Stages of a bear market; Strategy besides price action which analysts use; Distinction between investment academics and chartists; Technical factors to consider in chart analysts; Analysis of volume figures accompanying stock trades.

  • 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.

  • Bumps in the Ethical Road. Duska, Ronald // Journal of Financial Service Professionals;Jan2014, Vol. 68 Issue 1, p18 

    A professional organization or company that portrays itself as setting a higher standard than it lives up to in order to solicit more business is contradicting the very purpose for which it was established. Companies and organizations should not be external factors that make the ethical life of...

  • 20 Breaking Through: The State of the Risk Tolerance Conversation. Holton, Lisa // Journal of Financial Planning;Apr2011, Vol. 24 Issue 4, p5 

    The article reports on the re-evaluation of financial professionals of their actions on the risk tolerance of their clients due to economic uncertainty.

  • Trail blazers. Lawson, John // Money Marketing;7/28/2011, p40 

    In this article, the author discusses the advantages and drawbacks of adopting a trail commission approach on the relationship of investment advisors and clients in Great Britain.

  • SA still provides rump. Hasenfuss, Marc // Finance Week;9/27/2002, p30 

    Presents an investment analysis of the South African steakhouse franchisor Spur. Opportunities and risks for investors; Financial results for the 12 months to end-June 2002; Sources of revenues; Stock price forecast.

  • Evaluating stock market trends is rise, fall business. Auer, Robert // Indianapolis Business Journal;03/29/99, Vol. 20 Issue 2, p48A 

    Discusses tips in stock price forecasting and investment analyses. Frequently asked questions about stock trading; Factors influencing stock market trends; Dow Jones' rating of Guidant Corp.'s stocks.


Read the Article


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

Try another library?
Sign out of this library

Other Topics