Inalienable Customer Capital, Corporate Liquidity, and Stock Returns

We develop a model in which customer capital depends on key talents' contribution and pure brand recognition. Customer capital guarantees stable demand but is fragile to financial constraints risk if retained mainly by talents, who tend to quit financially constrained firms, damaging customer c...

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Veröffentlicht in:	The Journal of finance (New York) 2021-02, Vol.76 (1), p.211-265
Hauptverfasser:	DOU, WINSTON WEI, JI, YAN, REIBSTEIN, DAVID, WU, WEI
Format:	Artikel
Sprache:	eng
Schlagworte:	Ability Analysis Brand identification Brand image Brands Capital Financial disclosure Liquidity Stocks
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container_title	The Journal of finance (New York)
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creator	DOU, WINSTON WEI JI, YAN REIBSTEIN, DAVID WU, WEI
description	We develop a model in which customer capital depends on key talents' contribution and pure brand recognition. Customer capital guarantees stable demand but is fragile to financial constraints risk if retained mainly by talents, who tend to quit financially constrained firms, damaging customer capital. Using a proprietary, granular brand-perception survey, we construct a firm-level measure of the inalienability of customer capital (ICC) that captures the degree to which customer capital depends on talents. Firms with higher ICC have higher average returns, higher talent turnover, and more precautionary financial policies. The ICC-sorted long-short portfolio's spread comoves with financial constraints factor.
doi_str_mv	10.1111/jofi.12960
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subjects	Ability Analysis Brand identification Brand image Brands Capital Financial disclosure Liquidity Stocks
title	Inalienable Customer Capital, Corporate Liquidity, and Stock Returns
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