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Sigma Level and Shareholder Returns Correlation?

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  • #47514

    Ropp
    Participant

    Does anyone have any data on the correlation between a company’s net sigma level and shareholder returns?  I am looking for an article that shows how lower shareholder value is impacted by lower sigma levels, and vice versa.
    Any ideas?

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    #158436

    SS and stock price performance
    Member

    Dave,
    The key article that you are looking for is as follows:
    Goh, T., Low, P., Tsui, K. & Xie, M. (2003). Impact of Six Sigma Implementation on Stock Price Performance. Quality Engineering, Vol 15 (7), September, 753 – 763.
    As predicted by the efficient market hypothesis (Fame etc.), the Goh et. al. could only find a short-lived impact on stock price performance..

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    #158437

    SS and stock price performance
    Member

    Dave,
    If your question is related to a thesis/dissertation research in the area of management theory, in particular financial economics, any correlation established by a cross-sectional survey of the correlation between sigma level and stock price performance is meaningless. As you are relating operations performance with financial stock price performance your research design needs to take into account event history methodology. This ensures that you take into account the information decision making processes of the stock market. There are situations when cross-sectional studies are appropriate. But in the context of financial economics the event history analysis is the appropriate methodological approach, not a cross-sectional correlation. 

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