Does High Service Quality Reduce Risk or Create Idiosyncratic Returns?. Issue 3 (3rd July 2017)

• Record Type: Journal Article
• Authors: Chen, Chien-Chung
• Is Part Of: Services marketing quarterly. Volume 38:Issue 3(2017)
• Page Start: 155
• Page End: 169
• Publication Date: 2017-07-03
• Subjects: Airlines -- beta -- idiosyncratic returns -- idiosyncratic risk -- service quality; Marketing -- Periodicals; Service industries -- Periodicals; 658.8
• DOI: 10.1080/15332969.2017.1325645
• Languages: English
• ISSNs: 1533-2969

Abstract

ABSTRACT: This article explores the impact of service quality on idiosyncratic returns, idiosyncratic risk (nonsystematic risk), and beta (systematic risk). Service quality was derived from the airline quality rating, and three dependent variables were calculated by the Fama–French four-factor model. The data includes 1, 512 monthly records from 1997 to 2006, across 21 airlines. Multiple regression and vector autoregressive models were applied to test relationships among all, low-cost, and non-low-cost airlines. The study found that service quality has a positive impact on idiosyncratic returns in non-low-cost airlines; non-low-cost airlines are less affected by changes in the external environment.