The Stock Market's Pricing of Customer Satisfaction

A number of recent marketing studies examine the stock markets response to the release of American Customer Satisfaction Index (ACSI) scores. The broad purpose of these studies is to investigate the stock markets valuation of customer satisfaction. However, a key focus is on whether customer satisfaction information predicts long-run returns. We provide evidence on the markets pricing of ACSI information using a more comprehensive set of well-established tests from the accounting and finance literatures. We find that ACSI scores provide some incremental information on future operating income and that the market quickly responds to the release of information on large increases in satisfaction. However, we find no evidence that ACSI predicts long-run returns. These results suggest that customer satisfaction information is value-relevant, but are also consistent with Jacobson and Miziks (2009) conclusion that mispricing of ACSI information, if present at all, is limited.