Effects of ISO 9000 certification on firms' performance: A vision from the market

Abstract

As the number of ISO 9000-registered companies increases over time, it seems that the certification constitutes a prerequisite for success in business. Companies could interpret the registration as the way to obtain sustainable competitive advantages, but is it true? How is the registration interpreted by the market? Do markets assume that certified companies will get more benefits than non-certified? Some papers have tried to answer these questions by studying the pros and cons of the registration and by analysing the impact the certification has had over some financial results. However, few works have tried to analyse the effects from the point of view of the market. If investors think the ISO 9000 series will allow the company to get more benefits, then assuming the market is efficient, at the date that the company gets the certification, the information will be rapidly expanded and incorporated into the price of its stocks, which will presumably rise. This paper documents the stock price performance of a sample of Spanish companies certified by AENOR. The methodology of Event studies is applied to investigate whether the market interprets the registration of a company as a signal of its better future performance. After applying parametric and non-parametric tests, we do not find clear evidence to affirm that the market values positively ISO 9000 registration.