Discussion Papers, Department of Finance and Management Science, Norwegian School of Economics (NHH)
No 2009/11:
Evidence on Competitive Advantage and Superior Stock Market Performance
Øystein Gjerde ()
, 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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