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CEFS Working Paper Series, Center for Entrepreneurial and Financial Studies, Technische Universität München >
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http://hdl.handle.net/10419/48407
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| Title: | | Considering the shareholder perspective: value-based management systems and stock market performance  |
| 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 Germany |
| JEL: | | G34 G30 G38 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CEFS Working Paper Series, Center for Entrepreneurial and Financial Studies, Technische Universität München
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