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Delays in New Product Introductions and the Market Value of the Firm: The Consequences of Being Late to the Market


  • Kevin B. Hendricks

    (School of Business, College of William and Mary, Williamsburg, Virginia 23187)

  • Vinod R. Singhal

    (School of Management, Georgia Institute of Technology, Atlanta, Georgia 30332)


This paper empirically estimates the impact of not meeting promised new product introduction dates on the market value of the firm. We estimate the average "abnormal" change in the market value for a sample of 101 firms around the date when information about delaying the introduction of new products is publicly announced. On average, delay announcements decrease the market value of the firm by 5.25%. The average dollar change in the market value in 1991 dollars is $-119.3 million. The evidence suggests that there are significant penalties for not introducing new products on time. To provide further insight, regression analyses are used to identify factors that influence the direction and magnitude of the change in market value. We find that the competitiveness of the industry in which the firm operates, the size of the firm, and the firm's degree of diversification are statistically significant predictors for the change in the market value of firms that announce delays in the introduction of new products.

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  • Kevin B. Hendricks & Vinod R. Singhal, 1997. "Delays in New Product Introductions and the Market Value of the Firm: The Consequences of Being Late to the Market," Management Science, INFORMS, vol. 43(4), pages 422-436, April.
  • Handle: RePEc:inm:ormnsc:v:43:y:1997:i:4:p:422-436

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    8. McGuire, Stephen J. & Dilts, David M., 2008. "The financial impact of standard stringency: An event study of successive generations of the ISO 9000 standard," International Journal of Production Economics, Elsevier, vol. 113(1), pages 3-22, May.
    9. Perrone, G. & Roma, P. & Lo Nigro, G., 2010. "Designing multi-attribute auctions for engineering services procurement in new product development in the automotive context," International Journal of Production Economics, Elsevier, vol. 124(1), pages 20-31, March.
    10. Rau, Philipp & Spinler, Stefan, 2017. "Alliance formation in a cooperative container shipping game: Performance of a real options investment approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 155-175.
    11. Druehl, Cheryl T. & Schmidt, Glen M. & Souza, Gilvan C., 2009. "The optimal pace of product updates," European Journal of Operational Research, Elsevier, vol. 192(2), pages 621-633, January.
    12. Mehrafshan, Nima & Goerke, Björn & Clement, Michel, 2016. "The Effect of Unexpected Chart Positions on the Firm Value of Music Labels. An Event Study of Album Success," EconStor Preprints 142161, ZBW - German National Library of Economics.
    13. Yang, Jun & Lu, Wei & Zhou, Chunhui, 2014. "The immediate impact of purchasing/sales contract announcements on the market value of firms: An empirical study in China," International Journal of Production Economics, Elsevier, vol. 156(C), pages 169-179.
    14. R. Mark Krankel & Izak Duenyas & Roman Kapuscinski, 2006. "Timing Successive Product Introductions with Demand Diffusion and Stochastic Technology Improvement," Manufacturing & Service Operations Management, INFORMS, vol. 8(2), pages 119-135, June.
    15. Ashish Arora & Jonathan P. Caulkins & Rahul Telang, 2006. "Research Note--Sell First, Fix Later: Impact of Patching on Software Quality," Management Science, INFORMS, vol. 52(3), pages 465-471, March.
    16. Berchicci, L. & King, A.A. & Tucci, C.L., 2008. "The Strategic Determinants of Tardy Entry: Is Timeliness Next to Godliness?," ERIM Report Series Research in Management ERS-2008-070-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    17. Marshall Fisher, 2007. "Strengthening the Empirical Base of Operations Management," Manufacturing & Service Operations Management, INFORMS, vol. 9(4), pages 368-382, December.
    18. Kai-Lung Hui & Qiu-Hong Wang, 2005. "Delayed Product Introduction," Industrial Organization 0503011, EconWPA.
    19. Ramasesh, Ranga & Tirupati, Devanath & Vaitsos, Constantin A., 2010. "Modeling process-switching decisions under product life cycle uncertainty," International Journal of Production Economics, Elsevier, vol. 126(2), pages 236-246, August.
    20. Amankwah-Amoah, Joseph, 2017. "Global consolidation of industries and business failures: insights from brick-and-mortar and online outlets," MPRA Paper 82509, University Library of Munich, Germany.
    21. Kevin B. Hendricks & Vinod R. Singhal, 2008. "The Effect of Product Introduction Delays on Operating Performance," Management Science, INFORMS, vol. 54(5), pages 878-892, May.
    22. Kevin B. Hendricks & Vinod R. Singhal, 2009. "Demand-Supply Mismatches and Stock Market Reaction: Evidence from Excess Inventory Announcements," Manufacturing & Service Operations Management, INFORMS, vol. 11(3), pages 509-524, September.
    23. Wang, Chi-Feng & Chen, Li-Yu & Chang, Shao-Chi, 2011. "International diversification and the market value of new product introduction," Journal of International Management, Elsevier, vol. 17(4), pages 333-347.
    24. Ted Klastorin & Weiyu Tsai, 2004. "New Product Introduction: Timing, Design, and Pricing," Manufacturing & Service Operations Management, INFORMS, vol. 6(4), pages 302-320, August.


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