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Customer satisfaction, earnings and firm value

Don O'Sullivan (Melbourne Business School, University of Melbourne, Melbourne, Australia)
John McCallig (Michael Smurfit School of Business, University College Dublin, Dublin, Ireland)

European Journal of Marketing

ISSN: 0309-0566

Article publication date: 25 May 2012



The aim of this study is to examine the relationship between customer satisfaction, earnings and firm value.


A model borrowed from the accounting literature – the Ohlson model – is used to consider the impact of customer satisfaction on Tobin's q – a capital market‐based measure of firm performance widely used in marketing research. Data on firm performance is drawn from COMPUSTAT and integrated with data on customer satisfaction from the American Customer Satisfaction Index (ACSI).


Results show that customer satisfaction has a positive impact on firm value. Critically, the authors find that this impact is over and above the impact that earnings has on firm value. They also find that customer satisfaction positively and significantly moderates the earnings‐firm value relationship.

Research limitations/implications

Findings are limited to firms covered by the American Customer Satisfaction Index and subject to the assumptions underpinning the Ohlson model.

Practical implications

This study's demonstration of the complementary relationship between earnings and customer satisfaction in determining firm value should encourage managers to engage with satisfaction as a driver of business performance and value.


Findings extend recent studies on the impact of customer satisfaction on business performance. While prior studies either ignore earnings or focus on the relationship between satisfaction and stock returns, the authors show the impact of satisfaction on firm value, in a model that includes earnings. Importantly, they also extend prior studies by showing that the interaction between customer satisfaction and earnings is central to understanding the impact of both satisfaction and earnings on firm value. In addition, they demonstrate the usefulness of an earnings‐based valuation model, to explore the relationship between a marketing metric and firm value. The authors' approach may be adopted to consider the impact of other measures of marketing performance. Thus, they hope that this study helps to further bridge the gap between marketing and the financial disciplines.



O'Sullivan, D. and McCallig, J. (2012), "Customer satisfaction, earnings and firm value", European Journal of Marketing, Vol. 46 No. 6, pp. 827-843.



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