Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)
Evidence on Competitive Advantage and Superior Stock Market Performance
(), Kjell Henry Knivsflå
() and Frode Sættem
Abstract: This article analyzes the value-relevance of
industry-based and resource-based competitive advantage in a large sample
of firms listed on the Oslo Stock Exchange. We measure competitive
advantage by a single variable and perform a new decomposition into its
underlying sources. In 1986-2005, the industry-based and the resource-based
competitive advantage explain more than 20% of abnormal stock market
returns, accumulated over five years. The resource-based advantage is
almost four times more important than the industry-based advantage.
Differences in both the return and the risk capability of firms’ net assets
relative to their industry peers are significant parts of the
resource-based advantage, estimated at 60% and 40%, respectively.
Keywords: Competitive advantage; superior performance; value-relevance of performance metrics; (follow links to similar papers)
JEL-Codes: L25; (follow links to similar papers)
51 pages, October 20, 2009
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