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Evidence on Competitive Advantage and Superior Stock Market Performance

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Author Info
Gjerde, Øystein () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
Knivsflå, Kjell Henry () (Dept. of Accounting, Auditing and Law, Norwegian School of Economics and Business Administration)
Sættem, Frode () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

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Abstract

This article analyzes the value-relevance of industry-based and resource-based competitive advantage in a large sample of firms listed on the Oslo Stock Exchange. We measure competitive advantage by a single variable and perform a new decomposition into its underlying sources. In 1986-2005, the industry-based and the resource-based competitive advantage explain more than 20% of abnormal stock market returns, accumulated over five years. The resource-based advantage is almost four times more important than the industry-based advantage. Differences in both the return and the risk capability of firms’ net assets relative to their industry peers are significant parts of the resource-based advantage, estimated at 60% and 40%, respectively.

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Publisher Info
Paper provided by Department of Finance and Management Science, Norwegian School of Economics and Business Administration in its series Discussion Papers with number 2009/11.

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Length: 51 pages
Date of creation: 20 Oct 2009
Date of revision:
Handle: RePEc:hhs:nhhfms:2009_011

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Postal: NHH, Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
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Related research
Keywords: Competitive advantage; superior performance; value-relevance of performance metrics;

Find related papers by JEL classification:
L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

This paper has been announced in the following NEP Reports:

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This page was last updated on 2009-11-26.


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