Seraina C. Anagnostopoulou, Dimitrios Buhalis, Ioanna L. Kountouri, Eleftherios G. Manousakis and Andrianos E. Tsekrekos
The purpose of this study is to quantify the impact of online customer reputation on financial profitability.
Abstract
Purpose
The purpose of this study is to quantify the impact of online customer reputation on financial profitability.
Design/methodology/approach
Online reputation is captured by extracting the most recurring textual themes associated with customer satisfaction and dissatisfaction, expressed within positive vs negative online guest reviews on Booking.com. Latent semantic analysis is used for textual analysis. Proxies of overall financial performance are manually constructed for the sample hotels, using financial data from the Financial Analysis Made Easy (FAME) database. Ordinary least squares is used to gauge the effect of online customer reputation on financial profitability.
Findings
Empirical findings indicate that recurring textual themes from positive online reviews (in contrast to negative reviews) exhibit a higher degree of homogeneity and consensus. The themes repeated in positive, but not in negative reviews, are found to significantly associate with hotel financial performance. Results contribute to the discussion about the measurable effect of online reputation on financial performance.
Originality/value
Contemporary quantitative methods are used to extract online reputation for a sample of UK hotels and associate this reputation with bottom-line financial profitability. The relationship between online reputation, as manifested within hotel guest reviews, and the financial performance of hotels is examined. Financial profitability is the result of revenues, reduced by the costs incurred in order to be able to offer a given level of service. Previous studies have mainly focused on basic measures of performance, i.e. revenue generation, rather than bottom-line profitability. By combining online guest reviews from travel websites (Booking.com) with financial measures of enterprise performance (FAME), this study makes a meaningful contribution to the strategic management of hotel businesses.
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Panagiotis Mazis and Andrianos Tsekrekos
The purpose of this paper is to analyze the content of the statements that are released by the Federal Open Market Committee (FOMC) after its meetings, identify the main textual…
Abstract
Purpose
The purpose of this paper is to analyze the content of the statements that are released by the Federal Open Market Committee (FOMC) after its meetings, identify the main textual associative patterns in the statements and examine their impact on the US treasury market.
Design/methodology/approach
Latent semantic analysis (LSA), a language processing technique that allows recognition of the textual associative patterns in documents, is applied to all the statements released by the FOMC between 2003 and 2014, so as to identify the main textual “themes” used by the Committee in its communication to the public. The importance of the main identified “themes” is tracked over time, before examining their (collective and individual) effect on treasury market yield volatility via time-series regression analysis.
Findings
We find that FOMC statements incorporate multiple, multifaceted and recurring textual themes, with six of them being able to characterize most of the communicated monetary policy in the authors’ sample period. The themes are statistically significant in explaining the variation in three-month, two-year, five-year and ten-year treasury yields, even after controlling for monetary policy uncertainty and the concurrent economic outlook.
Research limitations/implications
The main research implication of the authors’ study is that the LSA can successfully identify the most economically significant themes underlying the Fed’s communication, as the latter is expressed in monetary policy statements. The authors feel that the findings of the study would be strengthened if the analysis was repeated using intra-day (tick-by-tick or five-minute) data on treasury yields.
Social implications
The authors’ findings are consistent with the notion that the move to “increased transparency” by the Fed is important and meaningful for financial and capital markets, as suggested by the significant effect that the most important identified textual themes have on treasury yield volatility.
Originality/value
This paper makes a timely contribution to a fairly recent stream of research that combines specific textual and statistical techniques so as to conduct content analysis. To the best of their knowledge, the authors’ study is the first that applies the LSA to the statements released by the FOMC.