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Indiana University Bloomington

Department of Finance

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Research and Publications

Journal Articles

Customer Satisfaction, Cash Flow, and Shareholder Value

2005, Journal of Marketing

Thomas S. Gruca, Lopo L. Rego


In this article, the authors strengthen the chain of effects that link customer satisfaction to shareholder value by establishing the link between satisfaction and two characteristics of future cash flows that determine the value of the firm to shareholders: growth and stability. Using longitudinal American Customer Satisfaction Index and COMPUSTAT data and hierarchical Bayesian estimation, the authors find that satisfaction creates shareholder value by increasing future cash flow growth and reducing its variability. They test the stability of findings across several firm and industry characteristics, and they assess the robustness of the results using multimeasure and multimethod estimation.


Gruca, Thomas S. and Lopo L. Rego (2005), "Customer Satisfaction, Cash Flow, and Shareholder Value," Journal of Marketing, 69 (3), 115-130.


shareholder value, customer satisfaction, cash flow growth, cash flow variability, hierarchical Bayesian regression