| Author: | Hendricks, K. B. Singhal, V. R. |
| Title: | The Long-Run Stock Price Performance of Firms with Effective TQM Programs |
| Journal: | Management Science
2001 : MAR, VOL. 47:3, p. 359-368 |
| Index terms: | SHARE PRICES TOTAL QUALITY MANAGEMENT COMPANIES |
| Language: | eng |
| Abstract: | This paper documents the long-run stock price performance of firms with effective Total Quality Management (TQM) programs. The winning of quality awards is used as a proxy for effective TQM implementation. The authors compare stock price performance of award winners against various matched control groups for a five-year implementation period and a five-year postimplementation period. During the implementation period there is no difference in the stock price performance, but during the postimplementation period award winners significantly outperform firms in the various control groups. Depending on the control group used, the mean outperformance ranges from 38% to 46%. The authors' results clearly indicate that effective implementation of TQM principles and philosophies leads to significant wealth creation. |
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