Technische Universität München >
Center for Entrepreneurial and Financial Studies (CEFS), Technische Universität München >
CEFS Working Paper Series, Center for Entrepreneurial and Financial Studies, Technische Universität München >
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|Title:||Considering the shareholder perspective: value-based management systems and stock market performance |
|Authors:||Rapp, Marc Steffen|
Schellong, Daniel A.
|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.|
|Document Type:||Working Paper|
|Appears in Collections:||CEFS Working Paper Series, Center for Entrepreneurial and Financial Studies, Technische Universität München|
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