How Main Street Drives Wall Street: Customer (Dis)satisfaction, Short Sellers, and Abnormal Returns

  • Date published October 21, 2020
  • Publication Journal of Marketing Research
  • Expertise
    Customer Satisfaction, Short Interest, Abnormal Stock Return, Capital Intensity, Competitive Intensity
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Although previous studies have established a direct link between customer-based metrics and stock returns, research is unclear on the mediated nature of their association. The authors examine the association of customer satisfaction and abnormal stock returns, as mediated by the trading behavior of short sellers. Using quarterly data from 273 firms over 2007–2017, the authors find that short interest—a measure of short seller activity—mediates the impact of customer satisfaction and dissatisfaction on abnormal stock returns. Customer dissatisfaction has a more pronounced effect on short selling compared with customer satisfaction.

In addition, customer satisfaction and dissatisfaction are more relevant for firms with low capital intensity and firms that face lower competitive intensity. The results show that a one-unit increase in customer satisfaction is associated with a .56 percentage point increase in abnormal returns, while a one-unit increase in customer dissatisfaction is associated with a 1.34 percentage point decrease in abnormal returns.


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Anatoli Colicev

Anatoli Colicev

Chair (Full Professor) in Marketing, Strategy and Analytics (University of Liverpool Management School)

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Ashwin Malshe

Ashwin Malshe

Assistant Professor of Marketing, College of Business, University of Texas at San Antonio, USA

Vikas Mittal

Vikas Mittal

J. Hugh Liedtke Professor of Marketing, Jesse H. Jones Graduate School of Business, Rice University, USA