Stock performance of Malcolm Baldrige National Quality Award winning companies

Abstract

Since its creation, the Malcolm Baldrige National Quality Award (MBNQA) has had a significant influence on many US organizations, particularly so for companies embarking on or continuing with quality improvement efforts. It is generally considered to be the most prestigious quality award in the US. This paper examines the impact the MBNQA has had on the stock performance of its recipients (1988-98) by carrying out four different types of analysis: (1) an event study to investigate the reaction of the stock market to MBNQA announcements; (2) analysis of the stock market performance of MBNQA recipients by adjusting for market and industry effects and by calculating annualized returns; (3) illustration of the risk-return relationship between MBNQA recipients and the S&P 500 Index, and (4) determination of the long-term impact of buying and holding shares of MBNQA-winning organizations by calculating Treynor's Index and Jensen's Measure.