Considering the shareholder perspective: value-based management systems and stock market performance

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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.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2010-09

Classification and Topics

• Classification: Wirtschaft ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Corporate Finance and Governance: General ; Corporate Finance and Governance: Government Policy and Regulation
• Subject: value-based management ; corporate governance ; econometric analysis ; Germany ; Betriebswirtschaftliches Ziel ; Shareholder Value ; Betriebliche Wertschöpfung ; Corporate Governance ; Ökonometrisches Modell ; Kapitalgesellschaft ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rapp, Marc Steffen ; Schellong, Daniel A. ; Schmidt, Maximilian ; Wolff, Michael
• Event: Veröffentlichung
• (who): Technische Universität München, Center for Entrepreneurial and Financial Studies (CEFS)
• (where): München
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/48407