Customer Satisfaction and Shareholder Value in the Hospitality and Tourism Industry: The Moderating Role of a CEO’s Marketing Experience

Abstract

Despite the long history of research examining the effects of firm-level customer satisfaction on shareholder value, the existing findings are mixed for the hospitality and tourism industry where customer satisfaction is particularly important for the success of firms. The inconsistent results require further examination of the shareholder value relevance of customer satisfaction. This study offers a comprehensive understanding of the topic by examining the effects of customer satisfaction not only on equity return but also equity risk, and identifying a key contingency. Using annual American Customer Satisfaction Index (ACSI) for publicly traded “restaurant”, “hotel”, and “airline” firms, this study finds that increasing ACSI is effective in enhancing shareholder value through the reduction of equity risk. This study further proposes the CEO’s marketing experience as a moderator and determines that it strengthens the risk-reducing effect of customer satisfaction. The findings of this study provide important implications to researchers and practitioners.