Six Sigma Stock Returns and Operating Performance

Management Research Review, (40:3), 2017 (Forthcoming)

Fox School of Business Research Paper No. 17-003

36 Pages Posted: 15 Nov 2016 Last revised: 10 Jan 2017

See all articles by Bora Ozkan

Bora Ozkan

Temple University Fox School of Business

J. Rubio

NYU Polytechnic School of Engineering - Department of Finance and Risk Engineering

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance

Ronnie Davis

University of New Orleans - College of Business Administration - Department of Economics and Finance

Date Written: November 14, 2016

Abstract

Since the 1980s, industrial organizations have adopted practices such as Six Sigma to maintain and enhance competitiveness. It is expected that Six Sigma should work as a positive signal to convey quality expectations to both customers and investors. Financially speaking, Six-Sigma must be translated into larger profits and increased shareholder wealth, as it is, after all, the fiduciary duty of the management team including the board of directors. In this study we expand the literature by looking at both financial and operational effects of undergoing through Six-Sigma trainings. We provide evidence of a four year catching up period of Six-Sigma companies listed in the Fortune 500 when adjusted for size and industry; we provide evidence of a negative mean abnormal returns following the first three years after implementation of Six-Sigma, but it becomes positive thereafter. In addition, we further analyze the effects on operating performance of undertaking Six-Sigma, also adjusted for industry and size. We only find significant statistical differences in two, out of 5 financial/operating performance aspects analyzed. Our findings, which are robust to several specifications of the tests, suggest that Six-Sigma firms, on average, are less liquid and have lower employee growth than Non-Six-Sigma firms.

Suggested Citation

Ozkan, Bora and Rubio, J. and Hassan, M. Kabir and Davis, Ronnie, Six Sigma Stock Returns and Operating Performance (November 14, 2016). Management Research Review, (40:3), 2017 (Forthcoming), Fox School of Business Research Paper No. 17-003, Available at SSRN: https://ssrn.com/abstract=2869413

Bora Ozkan (Contact Author)

Temple University Fox School of Business ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-8409 (Phone)

J. Rubio

NYU Polytechnic School of Engineering - Department of Finance and Risk Engineering ( email )

Brooklyn, NY 11201
United States

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

Ronnie Davis

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

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