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In this paper, we analyze the profitability of behavior-based price discrimination in a duopoly model with switching costs. We find that when firms price discriminate based on consumers' preferences, and remain unaware of their switching costs, price discrimination boosts the equilibrium profits compared to uniform pricing, when the heterogeneity in the consumers' preferences is not too large compared to that in the switching costs. This result qualitatively holds even in a two-period model with informed and forward-looking consumers. [ABSTRACT FROM AUTHOR]

Strategic emphasis is a critical decision reflecting a firm's relative proclivity toward value creation versus value appropriation. Despite the increasing role of the board in setting the strategic priorities of firms, there is a dearth of research examining board‐level influences on strategic emphasis. Drawing on the cognitive perspective of corporate governance, we posit that exposure to external information via board interlocks provides competing incentives to pursue value creation and value appropriation strategies. We hypothesize that political ideological diversity among directors facilitates the utilization of external information for novel purposes, thus increasing firms' value creation focus. Combining data on directors' political ideologies with network analysis, we test these hypotheses in 584 large U.S. firms between 2000 and 2018. We find that political ideological diversity influences strategic emphasis both directly and in interaction with board interlock network centrality: politically ideological diverse boards exhibit a greater focus on value creation, and this effect is strengthened when the board is well connected to others. These results have implications for the director selection process, and for executives advocating for value creation strategies and the requisite R&D investments under differing conditions of board composition and information exposure. [ABSTRACT FROM AUTHOR]

Private investment in public equity (PIPE) under Regulation D has played an increasingly important role in capital formation for U.S. listed firms. We study the role of earnings management around PIPE transactions and the relative use of real versus accrual-based earnings management. It is unclear whether the documented earnings management strategies around public equity offerings (e.g., Cohen and Zarown in J Account Econ 50:2–19, 2010; Kothari et al. in Account Rev 91(2):559–586, 2016) apply to private placements given the significant differences between the two ways to raise capital. PIPEs, relative to public offerings, have minimal registration requirements, more accredited investors, shorter completion times, and less external monitoring by the SEC, auditors, and analysts. We find firms engage in significantly more real earnings management relative to accrual-based earnings management in PIPE years compared to non-PIPE years, however, overall earnings management is not different because the higher incidence of real earnings management is offset by a lower incidence of accrual-based earnings management. In addition, we find when PIPE investors have a stronger incentive to monitor earnings management (i.e. when investors cannot price protect against stock price declines by shorting the PIPE stock), there is less real earnings management. [ABSTRACT FROM AUTHOR]

Compensation packages including incentives tied to a company's stock price can be powerful motivators for corporate leaders. But the authors' study also showed that these motivations can produce some serious unintended consequences. Equity incentives can tempt CMOs to engage in short-sighted marketing management such as cutting R&D and advertising spending in an effort to inflate current earnings and enhance the company's stock price. This myopic management boosts their personal earnings at the expense of their company's long-term performance. Our findings highlight the pitfalls and limitations of overreliance on equity in managerial compensation packages. Companies could continue to pay their C-level executives based on stock price performance but defer the payout to the future until the long-term consequences of their decisions become apparent. This would reduce the temptation to act on short-term impulses to boost equity compensation. [ABSTRACT FROM AUTHOR]

Investor demand has promoted share repurchases to the dominating payout instrument for U.S. firms. However, critics worry that the repurchase boom leads to firms neglecting long-term investments. Even worse, scholars have shown that investor pressure also motivates firms to cut marketing investments with the aim of boosting short-term income, a practice called myopic marketing management. Extant theory still lacks an understanding of whether and how the cooccurrence of share repurchases and myopic marketing affects firm stakeholders such as investors and consumers. Using a large-scale cross-industry sample, the authors reveal that there is a higher share of firms cutting marketing investments among repurchasing firms than among nonrepurchasing firms. Furthermore, investors immediately respond negatively to myopic firms that also repurchase shares. Finally, repurchases and myopic marketing are also associated with an increase in product recalls. This first study to assess share repurchases through a marketing lens hence reveals negative effects on both the stock and the consumer markets. [ABSTRACT FROM AUTHOR]

This issue introduces Marketing Letters' data policy, formulated by our data policy board, comprised of Dina Mayzlin, Darren Dahl, Anirban Mukhopadhyay, and Joachim Vosgerau (Chair). In line with the vision of the founding editors of Marketing Letters to publish interesting findings that are not wrong, this policy is designed to guard against "being wrong," without precluding publication of interesting research. It is designed to be (a) simple, i.e., easy to understand and execute; (b) effective, i.e., serving to improve integrity of science and the journal; and (c) protective, i.e., defining the rights, expectations, and responsibilities of all authors and readers of Marketing Letters. [ABSTRACT FROM AUTHOR]

I measure the impact of rarity on price. The main challenge is that usually rarity is positively correlated with quality. In addition, sometimes price also affects rarity. To overcome these difficulties, I study an NBA digital collectibles market called NBA Top Shot where those concerns are well addressed. By analyzing novel and rich data sets, I find that the elasticity of price with respect to circulation (reverse rarity) is −0.74 on average. I also find that less popular products are more elastic than more popular products are. [ABSTRACT FROM AUTHOR]

Investors routinely follow firms’ communications and actions to form expectations about the firms’ future performance. The authors propose a set of firm and industry characteristics that influence the formation of investor expectations in the context of new product announcements. Specifically, they argue that positive expectations of future innovation output should cause an ex-ante increase in stock prices and a smaller ex-post market reaction when an actual new product is announced. Using a sample of 4,865 new product announcements made by 826 publicly traded U.S. firms, the authors show that the stock market reaction to a new product announcement measured in a five-day window around the announcement is negatively related to (1) the number of new products previously announced by the firm, (2) the average number of new products previously announced by the firm’s competitors, and (3) the average sentiment of past public news about the firm. These three factors are also positively related to the market value of the firm measured immediately before each new announcement, controlling for increases in firm value directly attributable to past new product announcements. In contrast to many articles in the marketing literature that imply that the added value of a marketing event can be fully assessed from the stock market reaction to the announcement of the event, the authors clarify that for recurrent events or events that are part of a firm’s broader strategy, this reaction reflects only an update of investors’ expectations of future firm performance. [ABSTRACT FROM AUTHOR]

Companies increasingly face product harm crises resulting in product recalls, which often have a negative impact on firm value. Whereas prior research has studied the short-term effects of product recalls on firm value, the authors of this article focus on the long-term effects. They develop a conceptual framework and hypotheses about the main effect of recall volume and the moderating effects of crisis management strategies on the relationship between recall volume and long-term firm value. They empirically test the hypotheses in the auto industry context using both short-term abnormal returns analysis and long-term calendar-time portfolio analysis of 280 product recalls during 2005–2015. The findings reveal that the negative impact of product recall volume lingers over time. Brand (promotion) advertising has a significant positive (negative) effect on the relationship between recall volume and long-term abnormal returns. Furthermore, both voluntary recall initiation and postrecall remedial efforts positively moderate the impact of recall volume on long-term returns. These moderating effects are contrary to those in the short term. The results suggest that managers should use different advertising types during and after a recall, strategically initiate recalls, and diligently prepare postrecall remedies to mitigate the negative effects of recall volume on long-term return. [ABSTRACT FROM AUTHOR]

This research examines the influence of chief executive officers’ (CEOs’) political ideologies—specifically, their degree of political liberalism (i.e., support for the Democratic Party relative to the Republican Party)—on firms’ innovation propensity (i.e., rate of new product introductions [NPIs]). The authors propose that CEOs’ degree of political liberalism positively affects their firms’ rate of NPIs. This impact is weakened, however, when CEOs have low power, when a high proportion of their compensation comes from equity, when the marketing department has high influence in the top management team, and when the economy is growing. Liberal CEOs’ greater rate of NPIs is associated with superior Tobin’s q but also higher stock return volatility. Findings based on observations of 421 publicly listed U.S. firms from 2006 to 2010 provide considerable support for the authors’ hypotheses. The authors also examine changes in firms’ rate of NPIs and performance around CEO turnovers and find corroborating evidence for their thesis. These results highlight the role of executives’ personal values in shaping firms’ innovation strategy as well as the risks and rewards associated with aggressive NPIs. [ABSTRACT FROM AUTHOR]

The article discusses research regarding how investors react when companies release new products concurrently with other corporate news-related announcements, and it mentions capital market equilibrium, shareholder value, and advice about how businesses can leverage corporate communications to increase stock prices. Press releases issued by publicly traded U.S. companies are addressed, along with event study research and the efficient market hypothesis.

The paper by Si and Dai ([11]) introduces the concept of memory brackets and proposes that consumers who use larger memory brackets, such as older consumers, may perceive objectively more distant events to be subjectively closer in time. In this issue, we feature a lead article by Si and Dai ([11]) on how memory biases can impact time perception as the "Editors' Pick" and two commentaries on it - one by Tu and Soman ([12]) and the other by Davis and Drolet ([3]). For example, in the domain of health decisions and testing, consumers who use larger memory brackets, including but not limited to older consumers, may think they had a health check-up done recently when it was done a while back and is now overdue. [Extracted from the article]

Logo detection has been gaining considerable attention because of its wide range of applications in the multimedia field, such as copyright infringement detection, brand visibility monitoring, and product brand management on social media. In this article, we introduce LogoDet-3K, the largest logo detection dataset with full annotation, which has 3,000 logo categories, about 200,000 manually annotated logo objects, and 158,652 images. LogoDet-3K creates a more challenging benchmark for logo detection, for its higher comprehensive coverage and wider variety in both logo categories and annotated objects compared with existing datasets. We describe the collection and annotation process of our dataset and analyze its scale and diversity in comparison to other datasets for logo detection. We further propose a strong baseline method Logo-Yolo, which incorporates Focal loss and CIoU loss into the basic YOLOv3 framework for large-scale logo detection. It obtains about 4% improvement on the average performance compared with YOLOv3, and greater improvements compared with reported several deep detection models on LogoDet-3K. We perform extensive evaluation on three other existing datasets to further verify on both logo detection and retrieval tasks, and we demonstrate better generalization ability of LogoDet-3K on logo detection and retrieval tasks. The LogoDet- 3K dataset is used to promote large-scale logo-related research. The code and LogoDet-3K can be found at https://github.com/Wangjing1551/LogoDet-3K-Dataset. [ABSTRACT FROM AUTHOR]

To elucidate supply chain cooperation between a manufacturer and a retailer, this study examines a model in which the retailer makes voluntary investments to reduce the marginal production cost of the manufacturer. The manufacturer is allowed to introduce a direct selling channel in addition to the indirect channel through the retailer (i.e., manufacturer encroachment), which however dampens the retailers' investment incentives. The retailer can leverage its voluntary investments as a means of deterring manufacturer encroachment. We demonstrate that manufacturer encroachment is strategically deterred when the retailer's cost-reduction technology is sufficiently effective. This strategic encroachment deterrence encourages the retailer to invest more, but it narrows the variety of channels from which consumers can select. When the latter effect dominates the former effect, consumer surplus declines with strategic encroachment deterrence. [ABSTRACT FROM AUTHOR]

The authors reexamine the relation between customer satisfaction (measured by the American Customer Satisfaction Index) and long-term stock returns using statistical tests that are well specified in the presence of industry clustering. Their results are consistent with those of Fornell, Morgeson, and Hult (2016), who find positive abnormal stock returns for companies with high levels of customer satisfaction. However, the authors also identify three caveats that could affect the robustness of this conclusion. First, the results critically depend on the manner in which industry is defined. Second, because Fornell, Morgeson, and Hult use a proprietary trading strategy that has not been disclosed to the general public, the authors are unable to discern what fraction of their reported performance is due to customer satisfaction as opposed to other characteristics of the trading strategy. Finally, because the authors also find positive abnormal returns for the entire American Customer Satisfaction Index sample, at least some of the performance reported by Fornell, Morgeson, and Hult might be driven by sample characteristics unrelated to customer satisfaction. This article also provides useful guidance for measuring long-term abnormal returns in the presence of industry clustering. [ABSTRACT FROM AUTHOR]

Sorescu and Sorescu (2016) and Bharadwaj and Mitra (2016) have made a number of insightful observations and suggestions for future research regarding stock returns on customer satisfaction. They have also provided a series of assessments of a study by Fornell, Morgeson, and Hult (2016) that focus on abnormal returns on customer satisfaction. Building on the original study, as well as the two commentaries and previous research, the study's authors argue that the published empirical evidence is quite consistent in favor of abnormal returns on customer satisfaction. These findings are also supported by the new analysis of Sorescu and Sorescu, whomake several important contributions, not only regarding the persistence of abnormal returns over and beyond the technology sector but alsowith respect to the critical importance of industry classification in the context of customer satisfaction--something that definitely calls formore research attention. In fact, there aremany avenues for future research on the economic and financial impact of customer satisfaction, as laid out in the commentaries, the authors' original article, and this response. [ABSTRACT FROM AUTHOR]

The interest in the value relevance of marketing investments has given rise to numerous studies on the marketing-finance interface. This study integrates extant research findings and establishes empirical generalizations on marketing's impact on firm value. Specifically, the authors conduct a meta-analysis of prior econometric elasticity estimates of the stock market impact of marketing actions and marketing assets. Analyses based on 488 elasticities drawn from 83 studies reveal a mean elasticity of .04 for advertising expenditure variables and of .54 for marketing asset variables. Among marketing assets, customer-related assets show a higher mean elasticity of .72, compared with .33 for brand-related assets. Further analyses show that advertising elasticities are lower in more concentrated industries and that marketing asset elasticities are higher during recession times. Researchers should also be aware that characteristics of the research design (e.g., the type of firm value metric used, the omission of control variables, or not accounting for endogeneity) may affect the estimation results. [ABSTRACT FROM AUTHOR]

Advertising's influence on firm sales and firm value has drawn early attention from economists and accountants and more recent attention from marketers. Most studies that have investigated a link between advertising and sales have found such a link. However, studies that have investigated a link between advertising and firm value have only sometimes found that link. Meta-analysis has failed to determine moderators that govern the link between advertising and firm value. In this article, the authors hypothesize that advertising influences firm value for a differentiator because advertising can elaborate the firm's point of difference into brand equity, thereby building firm value. Advertising cannot build brand equity for a cost leader because such a firm has no point of difference on which to build. Identifying differentiators and cost leaders on the basis of firms' reactions to a change in accounting regulations, the authors confirm hypotheses: advertising is related to sales for all firms, but it is more strongly related to firm value for differentiators than for cost leaders. Beyond explaining differences in advertising effectiveness, this study's indicator of differentiation versus cost leadership should enhance future analyses of marketing's effect on firm-level outcomes using archival financial data. [ABSTRACT FROM AUTHOR]

This study examines the relationship between customer satisfaction, loyalty intention, and shareholder value at the firm and individual customer levels. The authors also explore industry differences by using a multilevel and random-effects approach in which individual customer scores are nested within firm-level data and the estimated interrelationships are treated as random coefficients that are explained by industry characteristics. They compile a unique and detailed data set, which covers 10 years of information on 137 firms and includes a matched sample of 189,069 customers from multiple sources, such as the American Customer Satisfaction Index, the Center for Research in Security Prices, and Compustat, to yield three important insights. First, aggregate firm-level effects may overestimate the impact that satisfaction has at the individual customer level. Second, a consideration of loyalty intention or repurchase intention as the mediator can improve our understanding of the satisfaction-shareholder value relationship and the fact that this relationship can vary across firms. Finally, the influence of satisfaction and loyalty intentions on shareholder value varies by industry. The authors discuss implications of findings for researchers, managers, and investors. [ABSTRACT FROM AUTHOR]

Although going public allows firms access to more financial capital that can fuel innovation, it also exposes them to a set of myopic incentives and disclosure requirements that constrain innovation. This tension is expected to produce a unique pattern of innovation strategies among firms going public, causing such firms to increase their innovation levels but reduce their innovation riskiness. Specifically, the authors predict that after going public, firms innovate at higher levels and introduce higher levels of variety with each innovation; however, these innovations are less risky, characterized by fewer breakthrough innovations and fewer innovations in new-to-the-firm categories. The authors compare 40,000 product introductions in the period 1980-2011 from a sample of consumer packaged goods firms that went public with a benchmark sample of firms that remained private, and the results support their predictions. Utilizing tests to resolve questions about endogeneity, including self-selection, reverse causality, and competing explanations, the authors demonstrate that initial public offering selection and dynamics do not drive this going-public effect. The authors also uncover a set of industry factors that mitigate the drop in breakthrough innovation by offering product-market incentives that counterbalance the documented effect of stock market incentives. [ABSTRACT FROM AUTHOR]

One of the key challenges in empirically modeling the total impact of marketing assets on financial performance is the limited availability of marketing metrics data over time. The author presents an approach for estimating the total financial impact of marketing assets with limited time-series data and demonstrates the approach with an application to brand equity research. Consistent with prior research, the aggregate analyses indicate that brand equity, as measured by customer mindset metrics, positively affects current financial performance. In addition, the author documents brand equity's significant and much greater impact on the firm's future financial performance: at the aggregate, only a small portion of the total financial impact of brand equity is reflected in current-year profits, whereas the bulk of the profitability impact is realized in the future. Most importantly, however, the analyses document significant heterogeneity of these effects: in some industries, the entire direct impact is contemporaneous, whereas in others, no contemporaneous effects are observed and all of the profitability impact occurs in the future. [ABSTRACT FROM AUTHOR]

Although changes to the channel system are among a firm’s most critical decisions, prior research has neglected to examine the impact of channel expansions on firm value. This article investigates whether a firm’s announcement of an increase in distribution intensity or the establishment of a new channel influences firm value. The authors also consider the moderating role of context-specific firm, market, and channel strategy contingencies. They test their hypotheses with an event study of 240 announcements of major channel expansions in the United States, Germany, and China. The results indicate that channel expansions affect firm value (i.e., through abnormal stock returns). However, the two types of channel expansions affect firm value differently. Whereas the establishment of a new channel positively influences firm value, reactions to an increase in distribution intensity are highly contingent. For example, firms operating in exceedingly turbulent or competitive markets experience firm value reductions in response to an increase in distribution intensity. Notably, the same two environmental contingencies enhance firm value when the firm establishes a new channel. [ABSTRACT FROM AUTHOR]

News reports carrying positive or negative sentiment about a firm influence its stock market performance. This study examines how two firm-controllable marketing factors, advertising and marketing capability, moderate the relationship between news stories and firm stock returns. Analysis of a panel data set of more than 7,000 firm-month observations indicates asymmetric and complementary moderating roles of the two marketing variables: advertising reinforces the favorable impact of positive news on abnormal stock returns, and marketing capability mitigates the adverse impact of negative news. Moreover, these moderating effects operate through different stakeholders. Whereas the moderating effect of marketing capability is due to its influence on customers and thus affects the level and volatility of future cash flows, advertising moderates the effect of news through individual investors' attention and response to the news. The econometric analysis accounts for potential endogeneity between news reports, stock returns, and marketing variables, and the results are robust to alternative measures and analysis approaches. The findings suggest the need for managers to broaden their stakeholder focus when evaluating advertising;s returns and to communicate the value of marketing capability to investors. [ABSTRACT FROM AUTHOR]

The article reports that the 2012 William F. O'Dell award for marketing theory, and methodology has been given to Nina Mazar, On Amir, and Dan Ariely for their article "The Dishonesty of Honest People: A Theory of Self-Concept Maintenance," published in the December, 2008 issue of the journal.

Firms raise a significant amount of funds and gain competitive advantage over their rivals through equity financing, namely through initial public offerings and seasoned equity offerings. The authors find that both initial public offering firms and seasoned equity offering firms adopt a more aggressive marketing strategy during the two years following their offering. However, not all equity issuers benefit equally from increased marketing spending, which can help signal companies' growth prospects to investors. A key moderator of the link between marketing investment and firm value is the strategic flexibility of rivals with respect to issuers. In particular, the stock market reacts favorably to an aggressive marketing strategy initiated by issuers competing against rivals with relatively less flexibility, whereas increased marketing expenditures do not translate into higher firm value when rivals have greater flexibility. Furthermore, the authors show that marketing expenditures create value within context: the role of marketing in enhancing shareholder value and the moderating effect of rivals' strategic flexibility are more pronounced in the two-year window immediately following an equity offering than at any other time. The authors conclude with a discussion of implications for theory and practice. [ABSTRACT FROM AUTHOR]

Market share and customer satisfaction are often used to assess marketing performance. Despite the widespread assumption of a positive relationship between these two variables, the limited extant empirical literature on the subject indicates either a negative or a nonsignificant relationship. The authors reexamine this relationship over a longer time period than has previously been possible in a representative sample of U.S. consumer markets and find a consistently significant negative market share-customer satisfaction relationship. This is because customer satisfaction is generally not predictive of firms' future market share, but market share is a strong negative predictor of firms' future customer satisfaction. In follow-up analyses, the authors find that a firm's customer satisfaction can predict its future market share when it is benchmarked against that of its nearest rival and customer switching costs are low. In examining why the market share-future customer satisfaction relationship is generally negative, they find strong support for preference heterogeneity as a key mediator in this relationship. They also show that marketing more brands moderates the negative effect of preference heterogeneity on future customer satisfaction. Thus, larger brand portfolios offer a strategy solution for the general market share-satisfaction trade-off. [ABSTRACT FROM AUTHOR]

Product-harm crises are omnipresent in today's marketplace. Such crises can cause major revenue and market-share losses, lead to costly product recalls, and destroy carefully nurtured brand equity. Moreover, some of these effects may spill over to nonaffected competitors in the category when they are perceived to be guilty by association. The extant literature lacks generalizable knowledge on the effectiveness of different marketing adjustments that managers often consider to mitigate the consequences of such events. To fill this gap, the authors use large household-scanner panels to analyze 60 fast-moving consumer good product crises that occurred in the United Kingdom and the Netherlands and resulted in the full recall of an entire variety. The authors assess the effects of postcrisis advertising and price adjustments on the change in consumers' brand share and category purchases. In addition, they consider the extent to which the effects are moderated by two key crisis characteristics: the extent of negative publicity surrounding the event and whether the affected brand had to publicly acknowledge blame. Using the empirical findings, the authors provide context-specific managerial recommendations on how to overcome a product-harm crisis. [ABSTRACT FROM AUTHOR]

The article presents information regarding marketing research manuscript submissions, permissions, and staff members of the journal.

A list is presented of editors and other officials of the publication, as well as contact information for the publication's editorial and advertising staffs and information on subscriptions and reprint rights.

Because firms do not publicly report marketing expenditures, most studies of the link between firm value and marketing consider advertising (which is publicly reported for many firms) a proxy for marketing. The authors extend those studies in two ways. First, they broaden the proxy for marketing by considering both advertising and sales force. Second, they offer an explanation for the fact that some studies linking advertising to firm value find a positive relationship, whereas others find a negative relationship. The accounting literature suggests that the link to firm value for both unexpected growth in sales force expenditures and unexpected growth in advertising expenditures should be negative. The authors confirm the hypothesized accounting relationship for sales force expenditures but find a contingent relationship for advertising expenditures. Firm value and unexpected growth in advertising expenditures are negatively related for firms that advertise below the advertising response threshold, but they are positively related for firms that advertise above that threshold. Perhaps because this contingent relationship is difficult for analysts to learn through observation of the stock market, analysts ignore value-relevant advertising expenditure information when they forecast firm value. [ABSTRACT FROM AUTHOR]

An index is provided for articles published by the periodical in 2010.

Although managers are interested in the financial value of customers and researchers have pointed out the importance of stock analysts who advise investors, no studies to date have explored the implications of customer satisfaction for analyst stock recommendations. Using a large-scale longitudinal data set, the authors find that positive changes in customer satisfaction not only improve analyst recommendations but also lower dispersion in those recommendations for the firm. These effects are stronger when product market competition is high and financial market uncertainty is large. In addition, analyst recommendations at least partially mediate the effects of changes in satisfaction on firm abnormal return, systematic risk, and idiosyncratic risk. Analyst recommendations represent a mechanism through which customer satisfaction affects firm value. Thus, if analysts pay attention to Main Street customer satisfaction, Wall Street investors should have good reason to listen and follow. Overall, this research reveals the impact of satisfaction on analyst-based outcomes and firm value metrics and calls attention to the construct of customer satisfaction as a key intangible asset for the investor community. [ABSTRACT FROM AUTHOR]

The article presents various information including a list of the publication's editors and officers, the roster of its editorial review board, and the names and affiliations of those who have served as ad hoc reviewers.

This article reviews the theory and empirical evidence of myopic management as it pertains to marketing practice. It documents empirically the stock market's inability to properly value marketing and innovation activity in the face of the potential for myopic management. The author assesses the total financial consequences of myopic management (the practice of cutting marketing and research-and-development spending to inflate earnings) and finds that myopia has a long-term net negative impact on firm value. Myopic management is contrasted with accounting accruals-based earnings inflation, and the author shows that the real activities (i.e., myopic management), and not the accounting numbers manipulation, have the greater negative impact on future financial performance. These results are consistent across alternative abnormal return measures and alternative benchmarks. The author argues that shareholders, managers, and marketing researchers can play a role in limiting myopic management practices. [ABSTRACT FROM AUTHOR]

Are persistent marketing effects most likely to appear right after the introduction of a product? The authors give an affirmative answer to this question by developing a model that explicitly reports how persistent and transient marketing effects evolve over time. The proposed model provides managers with a valuable tool to evaluate their allocation of marketing expenditures over time. An application of the model to many pharmaceutical products, estimated through (exact initial) Kalman filtering, indicates that both persistent and transient effects occur predominantly immediately after a brand's introduction. Subsequently, the size of the effects declines. The authors theoretically and empirically compare their methodology with methodology based on unit root testing and demonstrate that the need for unit root tests creates difficulties in applying conventional persistence modeling. The authors recommend that marketing models should either accommodate persistent effects that change over time or be applied to mature brands or limited time windows only. [ABSTRACT FROM AUTHOR]

Marketing decision makers are increasingly aware of the importance of shareholder value maximization, which calls for an evaluation of the long-term effects of their actions on product-market response and investor response. However, the marketing literature to date has focused on the sales or profit response of marketing actions, and the goals of marketing have traditionally been formulated from a customer perspective. Recently, there have been a few studies of the long-term investor response to marketing actions. The current research investigates one important aspect of this impact, the long-term relationship between advertising spending and market capitalization. The authors hypothesize that advertising can have a direct effect on valuation (i.e., an effect beyond its indirect effect through sales revenue and profit response). The empirical results across two industries provide support for the hypothesis that advertising spending has a positive, long-term impact on own firms' market capitalization and may have a negative impact on the valuation of a competitor of comparable size. The authors quantify the magnitude of this investor response effect for and discuss its implications for further research. [ABSTRACT FROM AUTHOR]

The article presents subject and author indexes for the Vol. 46, 2009 issue of this journal.

Subject and author indexes for the articles published in this issue are presented.

The authors develop and validate a conditional multiplier approach for valuing branded businesses. The approach enhances traditional multiplier-based valuation by explicitly incorporating brand characteristics into the model. The authors present theoretical arguments why, develop a model to demonstrate how, and provide an empirical illustration to show that brand assets are not fully reflected in contemporaneous margins, and therefore valuation accuracy can be improved by incorporating information about the properties of the firm's brand asset directly into a valuation framework. The authors find that brand metrics have statistically significant associations with valuation multipliers and add incremental explanatory power to accounting variables in explaining valuation multipliers. Out-of-sample analysis shows a 16% improvement in the mean absolute error for predictions that take into account brand metrics compared with predictions based on accounting variables alone. [ABSTRACT FROM AUTHOR]

Over the past decade, several studies have argued that customer satisfaction has high relevance for financial markets because it has a significant impact on stock returns. However, little attention has been given to understanding the impact of customer satisfaction on the risk of stock returns. The finance literature suggests that investors that judge performance only in terms of returns place more resources than warranted in risky opportunities, forgo profitable opportunities, and apply misguided performance evaluations. Accordingly, this study develops, tests, and finds empirical support for the hypotheses that positive changes (i.e., improvement) in customer satisfaction result in negative changes (i.e., reduction) in overall and downside systematic and idiosyncratic risk. Using a panel data sample of publicly traded U.S. firms and satisfaction data from the American Customer Satisfaction Index, the study demonstrates that investments in customer satisfaction insulate a firm's stock returns from market movements (overall and downside systematic risk) and lower the volatility of its stock returns (overall and downside idiosyncratic risk). The results are robust to alternative measures of risk, model specifications, and concerns related to sample composition criteria raised in some recent studies. Therefore, the results indicate that customer satisfaction is a metric that provides valuable information to financial markets. The robust impact of customer satisfaction on stock returns risk indicates that it would be useful for firms to disclose their customer satisfaction scores in their annual report to shareholders. [ABSTRACT FROM AUTHOR]

This article examines whether customer satisfaction is associated with key metrics from corporate bond markets—namely, credit ratings and cost of debt financing. The authors draw on theory in marketing and finance to predict how customer satisfaction should be associated with both measures. To test the hypotheses, they employ the American Customer Satisfaction Index (ACSI) database of more than 150 publicly traded firms during the period from 1994 to 2004. The empirical work controls for factors that are known to influence the bond market, such as firm profitability and risk, as well as potential unobservable factors. The findings indicate that firms with lower customer satisfaction exhibit lower credit ratings and higher debt costs—financial consequences of customer satisfaction not previously observed. The results also suggest that the association between ACSI and cost of debt is attenuated by the inherent level of risk faced by the firm. [ABSTRACT FROM AUTHOR]

The marketing profession is being challenged to assess and communicate the value created by its actions on shareholder value. These demands create a need to translate marketing resource allocations and their performance consequences into financial and firm value effects. The objective of this article is to integrate the existing knowledge on the impact of marketing on firm value. The authors first frame the important research questions on marketing and firm value and review the important investor response metrics and relevant analytical models as they relate to marketing. Next, they summarize the empirical findings to date on how marketing creates shareholder value, including the impact of brand equity, customer equity, customer satisfaction, research and development and product quality, and specific marketing-mix actions. Then, the authors review emerging findings on biases in investor response to marketing actions. They conclude by formulating an agenda for future research challenges in this emerging area. [ABSTRACT FROM AUTHOR]

The article discusses another article in the issue, "Marketing and Firm Value: Metrics, Methods, Findings, and Future Directions, " by Shuba Srinivasan and Dominique M. Hanssens, which examines the value added to business enterprises by monies spent on marketing. Topics include accounting research done on intangible assets, value-relevance research designs, and whether managers can influence the comprehension of investors regarding marketing actions taken by a firm. Also discussed are short-window studies.

A subject index for the December 2008 issue of "Journal of Marketing Research" is presented.

The article lists the editorial review board for the "Journal of Marketing," including Rohini Ahluwalia of the University of Minnesota, Kusum L. Ailawadi of Dartmouth College, and Joseph Alba of the University of Florida.