A quality award and stock market reaction : Evidence from Malaysia
By: TUCK, Cheah Eng
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ArticlePublisher: UK : Routledge, August 2005Subject(s): Quality award | Stock market reaction | Event study | Efficient market hypothesisTotal Quality Management & Business Excellence 16, 6, p. 681 - 691 Abstract: The Prime Minister's Quality Award (PMQA) is the most prestigious award in recognition of a company's effort towards organizational excellence. The intention is to create awareness among the business community on the importance of implementing a quality improvement programme in the company and to use recipient companies listed on the Bursa Malaysia. It was found in this study that the stock market is semi-strong efficient and the announcement did not bring the intended effect of creating statistically abnormal returns. After adjusting for thin trading, it was discovered that the traditional production-based company under-performed the market index while the service-based company, however, outperformed the market index. It is argued and widely understood by investors that a production-based company ought to have in place a proper quality control mechanism and further investment to impress the business community is rather futile. On the other hand, for the service-oriented company, expectations of customers are diverse and difficult to gauge. Therefore, any service provider wishing to improve the quality of their services is very welcome.
The Prime Minister's Quality Award (PMQA) is the most prestigious award in recognition of a company's effort towards organizational excellence. The intention is to create awareness among the business community on the importance of implementing a quality improvement programme in the company and to use recipient companies listed on the Bursa Malaysia. It was found in this study that the stock market is semi-strong efficient and the announcement did not bring the intended effect of creating statistically abnormal returns. After adjusting for thin trading, it was discovered that the traditional production-based company under-performed the market index while the service-based company, however, outperformed the market index. It is argued and widely understood by investors that a production-based company ought to have in place a proper quality control mechanism and further investment to impress the business community is rather futile. On the other hand, for the service-oriented company, expectations of customers are diverse and difficult to gauge. Therefore, any service provider wishing to improve the quality of their services is very welcome.
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