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Title:Considering the shareholder perspective: value-based management systems and stock market performance PDF Logo
Authors:Rapp, Marc Steffen
Schellong, Daniel A.
Schmidt, Maximilian
Wolff, Michael
Issue Date:2010
Series/Report no.:CEFS working paper series 2010-09
Abstract:We empirically study the use of value-based management systems in listed German firms and examine implications for firms' stock market performance. Using a novel, hand-collected data set covering 1,083 firm years from 2002 to 2008, we find that value-based management systems become increasingly common. Specifically, in 2008 42% of our sample firms have implemented such a system. In the empirical analysis, we find that firms that implement value-based management systems earn statistically significant and economically substantial abnormal stock market returns measured within a two-year adoption phase. These excess returns are not jeopardized by poor post-adoption returns. In the analysis, we carefully control for risk and account for endogeneity concerns. Overall, our findings support the view that shareholders consider the adoption of a value-based management system as a credible signal that management will focus on shareholder interests and that such systems actually increase shareholder value.
Subjects:value-based management
corporate governance
econometric analysis
Document Type:Working Paper
Appears in Collections:CEFS Working Paper Series, Center for Entrepreneurial and Financial Studies, Technische Universität München

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