Consumer Satisfaction and Stock Price Behavior: A Case of Diminishing Returns

Abstract

This study investigates stock price behavior of firms with differing levels of customer satisfaction as measured by American Customer Satisfaction Index (ACSI) scores. Using a fixed effects regression approach, it looks at the association between stock price changes and ACSI scores, total assets, total liabilities, and total revenues for sixty-four firms over a three-year period and discovers a marked difference between stock price changes for high- and low-scoring companies, indicating possible decreasing marginal returns for investments in customer satisfaction.