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The impact of managerial decision processes on shareholder value: an event study analysis

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dc.contributor.authorConser, Jessica, author
dc.contributor.authorGilley, Jerry, advisor
dc.contributor.authorVenneberg, Don, advisor
dc.date.accessioned2024-03-13T19:26:09Z
dc.date.available2024-03-13T19:26:09Z
dc.date.issued2009
dc.description.abstractThe purpose of this event study is to investigate the relationship between managerial decision making processes and shareholder value. The literature review explores the convergence of two disciplines, cognitive psychology and corporate finance stemming from the integration of prior event studies. The research employs a traditional event study methodology to examine the impact on shareholder wealth when companies announce the adoption of the proprietary decision making tool offered by Kepner Tregoe (KT), an international consulting firm in the northeastern United States. When companies adopt the decision making tool they are announced on the KT website as a client. This study considers all such announcements for publicly traded companies between the dates of 1994 and 2005, conditional upon the availability of stock price data from the Center for Research and Security Prices (CRSP). The final sample consists of 49 companies from the following industries: consumer and manufacturing; electric, telecom, and information technologies; energy; pharmaceutical; and other. To measure the amount of shareholder value added as a result of the market's reaction to announcement of the implementation of the decision making processes, the cumulative average abnormal returns (CAAR) are calculated for each event date. The overall CAAR is .52% for entire sample and is statistically significant at the .001 level. Industry partition results indicate positive CAARs ranging from .34% to 1.56%. The pharmaceutical partition has the lowest CAAR of .34% with statistical significance at the .05 level. The next CAAR at .59% occurred in the 'other' data partition with statistical significance at the .01 level. The consumer and manufacturing partition yields a CAAR of 1.17% two days before the event and is statistically significant at the .05 level. The electric, telecom, and information technology partition has a CAAR of 1.39% and statistically significance at the .01 level. The highest CAAR of 1.56% occurs in the energy partition with statistical significance at the .10 level. Descriptive statistics further explain the data using available financial data: outstanding debt, return on equity, return on assets, and price/earning ratios. There are 18 companies with available descriptive financial data. Of these companies, the median debt level is $5,704.80. The median return on equity (ROE) is 13.80, return on assets (ROA) 4.05, and price/earnings (P/E) 19.40. The conclusions drawn from this research indicate that there is a favorable reaction by shareholders when companies announce the adoption of the proprietary decision making process. The shareholders are privy to any detailed information about the specific decisions being made, but just that the decision process is being used. The market perceived a quantifiable value of a particular kind of decision making process. The market assumes that the adoption is going to improve the future cash flow of the companies. Future research may seek to explore the specific decisions that are made using proprietary decision making tools.
dc.format.mediumborn digital
dc.format.mediumdoctoral dissertations
dc.identifierETDF_Conser_2009_3401016.pdf
dc.identifier.urihttps://hdl.handle.net/10217/237661
dc.languageEnglish
dc.language.isoeng
dc.publisherColorado State University. Libraries
dc.relation.ispartof2000-2019
dc.rightsCopyright and other restrictions may apply. User is responsible for compliance with all applicable laws. For information about copyright law, please see https://libguides.colostate.edu/copyright.
dc.rights.licensePer the terms of a contractual agreement, all use of this item is limited to the non-commercial use of Colorado State University and its authorized users.
dc.subjectdecision-making
dc.subjectevent study
dc.subjectshareholder value
dc.subjectfinance
dc.titleThe impact of managerial decision processes on shareholder value: an event study analysis
dc.typeText
dcterms.rights.dplaThis Item is protected by copyright and/or related rights (https://rightsstatements.org/vocab/InC/1.0/). You are free to use this Item in any way that is permitted by the copyright and related rights legislation that applies to your use. For other uses you need to obtain permission from the rights-holder(s).
thesis.degree.disciplineEducation
thesis.degree.grantorColorado State University
thesis.degree.levelDoctoral
thesis.degree.nameDoctor of Philosophy (Ph.D.)

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