Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/48407 
Year of Publication: 
2010
Series/Report no.: 
Working Paper No. 2010-09
Publisher: 
Technische Universität München, Center for Entrepreneurial and Financial Studies (CEFS), München
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

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