Leger’s most reputable companies in Canada: Do customer views influence stock returns?

Since 1998, Leger has published its “Most Reputable Companies in Canada” rankings. The survey is unique in that rankings are based on the views of customers who respond to factors that include the quality of products and services and customer service. This paper tests whether being listed in the rankings leads to enhanced performance. We find that portfolios of publicly traded Leger-ranked securities (of U.S.-based firms in the survey) produce statistically significant announcement window returns. On a long-term basis, a subset of the Canadian-based firms outperforms a matched sample on a raw and risk-adjusted returns basis. High-intensity capital firms listed in the survey outperform their counterparts overall, with results augmented when the industries of these firms are highly competitive. Like the Canadian sample, firms with higher capital intensity from more competitive industries exhibit greater accounting performance in the year following the survey release.