Evidence on Competitive Advantage and Superior Stock Market Performance
AbstractThis 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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Bibliographic InfoPaper provided by Department of Business and Management Science, Norwegian School of Economics in its series Discussion Papers with number 2009/11.
Length: 51 pages
Date of creation: 20 Oct 2009
Date of revision:
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Postal: NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Phone: +47 55 95 92 93
Fax: +47 55 95 96 50
Web page: http://www.nhh.no/en/research-faculty/department-of-business-and-management-science.aspx
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Competitive advantage; superior performance; value-relevance of performance metrics;
Other versions of this item:
- Øystein Gjerde & Kjell Knivsflå & Frode S�ttem, 2010. "Evidence on competitive advantage and superior stock market performance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(4), pages 277-301.
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-14 (All new papers)
- NEP-CSE-2009-11-14 (Economics of Strategic Management)
- NEP-RMG-2009-11-14 (Risk Management)
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