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The Financial Information Content of Perceived Quality

The Financial Information Content of Perceived Quality The authors investigate whether movement in a firm's stock price, that is, a measure of firm value, is associated with information contained in perceived quality measures. In a model that also allows for the effect of economywide factors and a firm's return on investment, they find a positive relationship between stock return and changes in quality perceptions. These results imply that the quality measure contains information, incremental to that reflected by current-term accounting measures, about future-term business performance. They suggest that managers should convey information to the stock market, such as the brand's quality image, useful in depicting the long-term prospects of the business. By doing so, the stock market will rely less on short-term measures of business performance, and managers will be freer to undertake strategies necessary for ensuring the long-term viability of their firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Marketing Research SAGE

The Financial Information Content of Perceived Quality

Journal of Marketing Research , Volume 31 (2): 11 – May 1, 1994

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References (26)

Publisher
SAGE
Copyright
© 1994 American Marketing Association
ISSN
0022-2437
eISSN
1547-7193
DOI
10.1177/002224379403100204
Publisher site
See Article on Publisher Site

Abstract

The authors investigate whether movement in a firm's stock price, that is, a measure of firm value, is associated with information contained in perceived quality measures. In a model that also allows for the effect of economywide factors and a firm's return on investment, they find a positive relationship between stock return and changes in quality perceptions. These results imply that the quality measure contains information, incremental to that reflected by current-term accounting measures, about future-term business performance. They suggest that managers should convey information to the stock market, such as the brand's quality image, useful in depicting the long-term prospects of the business. By doing so, the stock market will rely less on short-term measures of business performance, and managers will be freer to undertake strategies necessary for ensuring the long-term viability of their firms.

Journal

Journal of Marketing ResearchSAGE

Published: May 1, 1994

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