The stock market's reaction to quality certification: Empirical evidence from Spain

The objective of this paper is to analyse the stock market's reaction to a company that is granted a quality certification (ISO 9000), and particularly when such an award is publicly announced. To do so, we carried out an event study, estimating the mean ‘abnormal’ change in the stock prices of all of the firms that obtained quality certification, based on the ISO 9000 norms, while they were trading on the Spanish stock market between 1993 and 1999. The results show that the stock market reacts positively to such certification. This implies that quality certification can be considered as a useful tool for reducing the asymmetry in the information that circulates among buyers and sellers.