Do Stock Markets Value Efficiency?

11 Pages Posted: 27 May 2009

See all articles by Kevin Amess

Kevin Amess

Nottingham University Business School

Sourafel Girma

Nottingham University Business School

Abstract

An empirical model determining the relationship between changes in firm-level productivity and changes in firm value is estimated using an unbalanced panel of 706 public limited companies observed over the period 1996–2002. We find a positive relationship between efficiency and the market value of manufacturing sector firms controlling for traditional accounting measures of performance such as earnings per share and the return on capital employed. This evidence is consistent with the stock market valuing the adoption of better management practices that lead to better resource utilisation. By contrast, we find no such evidence for service sector firms.

Suggested Citation

Amess, Kevin and Girma, Sourafel, Do Stock Markets Value Efficiency?. Scottish Journal of Political Economy, Vol. 56, Issue 3, pp. 321-331, July 2009. Available at SSRN: https://ssrn.com/abstract=1409155 or http://dx.doi.org/10.1111/j.1467-9485.2009.00486.x

Kevin Amess (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

HOME PAGE: http://www.nottingham.ac.uk/business/lizka1.html

Sourafel Girma

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

Register to save articles to
your library

Register

Paper statistics

Downloads
1
Abstract Views
392
PlumX Metrics