Is Customer satisfaction leading financial performance: An empirical evidence from Chinese SOE

A growing number of accounting theoreticians believed that non-financial measures can provide incremental information, and multiple performance measures should be applied to Chinese enterprises. However, little empirical evidence is available on the behavior of non-financial measures. Using 2 year data from 78 state owned enterprises, this study provides evidence on the relationship between non-financial measures and financial performance. The results indicate that non-financial measure, customer satisfaction, is significantly associated with contemporary and future financial performance. Furthermore, high level customer satisfaction enterprises get higher profitability by increasing unit profit other than enlarging sales.