Customer Satisfaction and Long-Term Stock Returns

September 2016 | Sorescu, Alina

We reexamine the relation between customer satisfaction (measured by the American Customer Satisfaction Index (ACSI)) and long-term stock returns, using statistical tests that are well-specified in the presence of industry clustering. Our results are consistent with those of Fornell et al. (2016) who find positive abnormal stock returns for companies with high levels of customer satisfaction. However, we also identify three caveats that could affect the robustness of this conclusion. First, the results critically depend upon the manner in which we define industry. Second, because Fornell et al. (2016) use a proprietary trading strategy that has not been disclosed to the general public, we are unable to discern what fraction of their reported performance is due to customer satisfaction as opposed to other characteristics of the trading strategy. Finally, because we also find positive abnormal returns for the entire ACSI sample, at least some of the performance reported by Fornell et al. (2016) might be driven by sample characteristics unrelated to customer satisfaction. Our paper also provides useful guidance for measuring long-term abnormal returns in the presence of industry clustering.





  • Sorin Sorescu


Journal of Marketing

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