Universität zu Köln

Himme, Alexander ORCID: 0000-0001-6256-7529 and Fischer, Marc (2014). Drivers of the cost of capital: The joint role of non-financial metrics. Int. J. Res. Mark., 31 (2). S. 224 - 239. AMSTERDAM: ELSEVIER. ISSN 1873-8001

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Abstract

Recent marketing studies suggest that non-financial metrics, such as customer satisfaction and brand value, help explain the variation in the cost of equity and the cost of debt. These studies typically focus on only one non-financial metric and one component of capital cost. In this study, we broaden the understanding of the relevance of non-financial metrics to the cost of capital. We investigate the joint role of customer satisfaction, brand value, and corporate reputation for stock market beta and credit ratings, which reflect variation in equity and debt risk premiums across firms. In addition to the joint direct influence of these metrics on capital cost, we also study their interaction effects. We develop a conceptual model to explain the effects on capital costs and test the resulting hypotheses in a broad sample of 344 firms from diverse industries using data from the 1991-2006 period. Our results suggest that higher satisfaction ratings reduce both the cost of equity and cost of debt, whereas brand value and corporate reputation only show a negative direct association with the cost of debt. In addition, both measures moderate the effect of satisfaction on the cost of debt. Brand value attenuates the influence of satisfaction, whereas corporate reputation amplifies this effect. (C) 2013 Elsevier B.V. All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Himme, Alexander UNSPECIFIED orcid.org/0000-0001-6256-7529 UNSPECIFIED Fischer, Marc UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-436433
DOI:	10.1016/j.ijresmar.2013.10.006
Journal or Publication Title:	Int. J. Res. Mark.
Volume:	31
Number:	2
Page Range:	S. 224 - 239
Date:	2014
Publisher:	ELSEVIER
Place of Publication:	AMSTERDAM
ISSN:	1873-8001
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language CUSTOMER SATISFACTION; SHAREHOLDER VALUE; MARKET SHARE; BRAND EQUITY; QUALITY; RISK; PROFITABILITY; RETURNS; IMPACT; MATTER Multiple languages Business Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/43643