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Customer ratings and firm value: Evidence from big data analysis of online consumption in China

Author

Listed:
  • Du, Qianqian
  • Kong, Dongmin
  • Li, Yanglin
  • Ye, Kuicheng

Abstract

This study employs big data from JD.com, a leading online consumption platform in China, to investigate the impact of customer product ratings on the value of listed firms. Our findings indicate that a long-short strategy, buying firms with high abnormal customer ratings and selling those with low abnormal ratings, yields significant abnormal returns. Notably, we observe that poor customer ratings negatively correlate with future stock prices. Mechanism analysis suggests that customer ratings can predict future unexpected earnings and revenues. Overall, these findings indicate that consumer ratings provide unique insights into firms’ fundamentals and stock pricing in the Chinese stock market.

Suggested Citation

  • Du, Qianqian & Kong, Dongmin & Li, Yanglin & Ye, Kuicheng, 2025. "Customer ratings and firm value: Evidence from big data analysis of online consumption in China," Finance Research Letters, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001321
    DOI: 10.1016/j.frl.2025.106867
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    More about this item

    Keywords

    Customer rating; Firm value; Information diffusion; Digital economy; Subject classification codes: G02; G11; G19;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G19 - Financial Economics - - General Financial Markets - - - Other

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