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Evidence on Competitive Advantage and Superior Stock Market Performance

Author

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  • 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)

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.

Suggested Citation

  • Gjerde, Øystein & Knivsflå, Kjell Henry & Sættem, Frode, 2009. "Evidence on Competitive Advantage and Superior Stock Market Performance," Discussion Papers 2009/11, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2009_011
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    File URL: http://hdl.handle.net/11250/164156
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    References listed on IDEAS

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    More about this item

    Keywords

    Competitive advantage; superior performance; value-relevance of performance metrics;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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