DO STOCK MARKETS VALUE EFFICIENCY?
Article first published online: 22 MAY 2009
© 2009 The Authors. Journal compilation © 2009 Scottish Economic Society
Scottish Journal of Political Economy
Volume 56, Issue 3, pages 321–331, July 2009
How to Cite
Amess, K. and Girma, S. (2009), DO STOCK MARKETS VALUE EFFICIENCY?. Scottish Journal of Political Economy, 56: 321–331. doi: 10.1111/j.1467-9485.2009.00486.x
- Issue published online: 22 MAY 2009
- Article first published online: 22 MAY 2009
- Date of receipt of final manuscript: 19 November 2008
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.