Evidence on competitive advantage and superior stock market performance

Øystein Gjerde, Kjell Knivsflå and Frode Sættem
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Kjell Knivsflå: Norwegian School of Economics and Business Administration, Bergen, Norway, Postal: Norwegian School of Economics and Business Administration, Bergen, Norway

Managerial and Decision Economics, 2010, vol. 31, issue 4, 277-301

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 5 years. The resource-based advantage is almost 4 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. Copyright © 2009 John Wiley & Sons, Ltd.

Date: 2010
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Working Paper: Evidence on Competitive Advantage and Superior Stock Market Performance (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:31:y:2010:i:4:p:277-301

DOI: 10.1002/mde.1488

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