Consumer Complaints and Company Market Value
Consumer complaints affect company market value and common sense suggests that a negative impact is expected. However, do complaints always negatively impact company market value? We hypothesize in this study that complaints may have a non-linear effect on market value. Positive (e.g. avoiding h...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Associação Nacional de Pós-Graduação e Pesquisa em Administração (ANPAD)
2014-07-01
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| Series: | BAR: Brazilian Administration Review |
| Subjects: | |
| Online Access: | http://www.anpad.org.br/periodicos/arq_pdf/a_1474.pdf |
| Summary: | Consumer complaints affect company market value and common sense suggests that a negative impact is
expected. However, do complaints always negatively impact company market value? We hypothesize in this
study that complaints may have a non-linear effect on market value. Positive (e.g. avoiding high costs to solve
complaints) and negative (e.g. speedy and intense diffusion) tradeoffs may occur given the level of complaints.
To test our non-linear hypothesis, a panel data was collected from cell phone service providers from 2005 to
2013. The results supported our tradeoff rationale. Low levels of complaints allow for companies to increase
market value, while high levels of complaints cause increasing harm to market value. The sample, model and
period considered in this study, indicates a level of 0.49 complaints per thousand consumers as the threshold for
a shift in tradeoffs. The effects on market value become increasingly negative when trying to make reductions to
move below this level, due to negative tradeoffs. |
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| ISSN: | 1807-7692 1807-7692 |