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Effects of ISO 9000 certification on firms'

performance: A vision from the market
a b
Micaela Martínez-Costa & Angel Rafael Martínez-Lorente
a
University of Murcia , Spain
b
Polytechnic University of Cartagena , Spain
Published online: 25 Aug 2010.

To cite this article: Micaela Martínez-Costa & Angel Rafael Martínez-Lorente (2003) Effects of ISO 9000 certification on
firms' performance: A vision from the market, Total Quality Management & Business Excellence, 14:10, 1179-1191

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 TQM & BUSINESS EXCELLENCE, VOL. 14, NO. 10, DECEMBER, 2003, 1179–1191

Effects of ISO 9000 certification on firms’

performance: a vision from the market

M M́-C1 & A R M́-

L2
Downloaded by [University of California Santa Cruz] at 18:09 10 November 2014

1
University of Murcia, Spain & 2Polytechnic University of Cartagena, Spain

 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.

Introduction
ISO 9000 series is a set of international standards usually implemented with the objective of
proving the existence of a correctly implemented quality system inside a company.
These standards are considered able to transform process and product quality and satisfy
consumers’ needs. However, they are neither a ‘quality label’ nor a guarantee of the existence
of any quality (ISO, 2000). Without a suitable attitude from the company, certification does
not lead to these quality results. The only meaning of certification is that an independent
auditor verifies that a quality system has been implemented in the company according to a
generic norm.
In recent years, the number of certifications throughout the world has grown. In
December 2000, 158 countries accounted for 408 631 certifications. This means a growth of
18.9% on the same month of the previous year. China, Italy, Japan, the Republic of Korea
and Spain have been the countries with more new certifications. Europe is still the regional
area with more certified companies (53.87%) but its relative weight is falling every year.

Correspondence: M. Martı́nez-Costa, Departamento de organización de empresas y finanzas, Facultad de

economia y empresa, Campus de Espinardo, Murcia, CP: 30100, Spain. E-mail: mili@um.es

ISSN 1478-3363 print/ISSN 1478-3371 online/03/0101179-13 © 2003 Taylor & Francis Ltd
DOI: 10.1080/1478336032000107735
 1180 M. MARTÍNEZ-COSTA & A. R. MARTÍNEZ-LORENTE
Downloaded by [University of California Santa Cruz] at 18:09 10 November 2014

Figure 1. Evolution of certification in the World and in Europe.

Figure 1 summarizes certification’s evolution in Europe and the world.

As can be concluded from the previous values, ISO 9000 standards are applied mostly
in Europe, although the rest of the world is increasingly applying them. The question now is
what is the reason for the rapid evolution of these standards? Do companies derive any
benefit from their application?
Both the growing pattern of registrations since the creation of the rules in 1987 until
now and the fact of their generalization among many different sectors (not only manu-
facturing) show that organizations consider the standards as a source of competitive advan-
tage. However, what is the vision from the market about the helpfulness of registration?
Undoubtedly, financial and economic indexes and managers’ perceptions of performance
are indicators of the market evaluation of the ISO 9000 implementation in a company.
Nevertheless, the direct impact of this appreciation from the market can only be measured
through the value of an organization’s shares.

Review of the literature

Despite there being many articles about ISO 9000, most of them are not empirical. In fact,
the database ABI-INFORM for the period 1987–99 consists of a total of 1725 publications
on this issue. Many of these articles are limited to case studies and are merely descriptive or
prescriptive (Ebrahimpour et al., 1997; Withers & Ebrahimpour, 2000). Among them, only
a small portion tries to investigate the relationship between registration and performance.
This relationship remains unclear in the literature.
Despite the fact that some articles conclude that the ISO 9000 certification is able to
improve many aspects of management and performance (Casadesús & Jiménez, 2000;
Romano, 2000; Withers & Ebrahimpour, 2000), most of them give a less optimistic vision of
their benefits (Terziovski et al., 1997; Lima et al., 2000; Simmons, 1999; Sun, 2000).
Terziovski et al. (1997) did not find any positive relationship between ISO 9000
certification and performance. In their sample of Australian and New Zealand companies,
they found in the certification only the benefit of opening previously closed doors in the
market. The ability of registration to provide an indicator of good management is questioned.
A similar study was made by Lima et al. (2000). After comparing a sample of ISO 9000
 EFFECTS OF ISO 9000 CERTIFICATION 1181

registered companies with a control group of non-registered companies, they did not find
significant differences. Likewise, Simmons (1999) could not show any competitive advantage
in management for companies that implemented the ISO 9000 system.
In order to obtain competitive advantages from the registration, Sun (2000) advises
considering it as a first step in the process of Total Quality Management system implementa-
tion. This advice is congruent with the relationship between benefits from certification and
the causes that lead the company to obtain it. Thus, many authors point out that motivation
is critical at the time to predict the impact of registration on the performance of the company
(Meegan & Taylor, 1997; Huarng et al., 1999; Brecka, 1994; Hughes et al., 2000). These
authors agree that companies that decide to implement ISO 9000 motivated only by external
causes (customer or supplier pressure) without believing in the benefits of the implementation
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of a quality system, will get fewer results than companies that implement them motivated by
internal causes.
It can therefore be deduced that ISO 9000 certification may be able to improve some
aspects of performance when the company is expecting to obtain something more than a
simple piece of paper to show customers. However, most authors affirm that the main
motivation for organizations to implement the standard is of the external type (Rayner &
Porter, 1991; Askey & Dale, 1994; Brown et al., 1998; Ebrahimpour et al., 1997; Martı́nez
Fuentes et al., 2000a, 2000b; Casadesús et al., 1999; Anderson et al., 1999; Hughes et al.,
2000; Vloeberghs & Bellens, 1996; Withers & Ebrahimpour, 2000) although there are also
some of them who found internal motivation as well (McAdam & McKeown, 1999;
Escanciano, 2000; Ferguson et al., 1999; Acharya & Ray, 2000).
If we accept that the main motivation for companies to obtain certification is external,
taking into account that motivation is a critical factor to achieving results from the imple-
mentation of ISO 9000, it would be of great interest to investigate whether the value of a
company in the market increases at the time of obtaining the registration.
Docking & Dowen (1999) in a research with a sample of North American firms found
that the market reacts positively to certification of small companies. Results for the remainder
of organizations were not significant. They explained this fact because attaining certification
to show the company has implemented a quality system is expensive. As bigger companies
are more well-known, they would not need to show it. These results are not necessarily
generalizable to the Spanish market, as the Spanish entrepreneurial structure and investor
characteristics are not the same as in the US.

Empirical study: event study

Methodology
‘Event study’ is a methodology usually applied in financial research to analyse the impact
that an event that provides added information to investors causes upon the company’s value
in the stock market. With this methodology, the analysed event is isolated from the rest of
events that could take place in that period of time.
The event study is based on the idea that the stock price of a firm depends on its
expected benefits in the future. Stockholders take into account information about the
company that may be changing over time. This information allows them to estimate possible
future benefits, and based on it they are able to estimate the value of the company on the
stock market. Any change in information that may induce the stockholder to think that the
company will improve its future benefits will raise the price of the stocks. In the same manner,
any negative information about the company that may damage its future performance will
 1182 M. MARTÍNEZ-COSTA & A. R. MARTÍNEZ-LORENTE

cause the price of stocks to go down. All this is based on a perfect market (a market in which
information is quickly extended and known by all stockholders to allow them to choose the
best option at any moment). This supposition is not so far from reality, as nowadays
information is quickly published via radio, television, newspapers, etc.
From the above, it can be deduced that the way in which any information provided to
the market can influence the stock price will depend on the importance that the stockholders
give to it, that is, the degree to which they think that the future benefits will be affected. So
this would be the direct evaluation of the market re the impact of the event, the ISO 9000
certification, on future positive values of a company implementing the ISO 9000 set of
standards.
Event study methodology has been used by many researchers in different areas, from
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finance (Brown & Warner, 1985; Kothari & Warner, 1997; Mitchell & Stafford (2000) to
management (Howton et al., 2000; Hanvanich & Cavusgil, 2001). In the quality arena it has
been applied by Easton & Jarrell (1998), Hendricks & Singhal (1996), Docking & Dowen
(1999) and Adams et al. (1999).
The steps of this methodology and results of the research will be described together.

Sample
The sample analysed comprises 30 Spanish companies. All are certified by AENOR and are
quoted on the Spanish continuous market. As a first step, a list was obtained of companies
quoted on this secondary market. Later, AENOR was consulted as to which of the companies
were certified and the date of certification.
Once this first step was taken, the first time the company was certified was chosen as
the date from which the market should react. This date was selected because it is supposed
to provide completely new information to the market. Information about the stock final
prices was obtained from the Madrid stock exchange market. Table 1 shows the companies
making up the study, their first date of certification and the number of employees as a
measure of company size. We have chosen the number of employees following much of the
specialized literature in operations management (Ghobadian & Gallear, 1996; Terziovski
et al. 1997; Beskese & Cebeci, 2001; Gotzamani & Tsiotras, 2001; Rahman, 2001). Rahman
(2001) states that the number of people a company employs is usually proportional to the
magnitude of its financial resources. The criteria varies in each study about what is considered
a big company. Beskese & Cebeci (2001) consider a small company to have fewer than 100
employees, a medium company between 100 and 500 and a big one more than 500.
Gotzamani & Tsiotras (2001) consider small to be a company with fewer than 50, medium
between 50–200 and large more than 200. In this research, nearly all the companies have
more than 500 employees. The sample can be considered then as made up of large companies.

Empirical study

Determination of the event period. One of the main difficulties of this methodology consists
of determining the exact moment at which the event occurs and, if it is not the same, the
moment at which the information is provided to the market. It is at that moment when,
according to this methodology, an abnormal return appears. The problem is that in many
cases it is difficult to know exactly when the information is available for every stockholder
and if they will look for this information. In this research, the date on which the company
was certified was chosen as the event date. The reason is that it has been supposed that this
kind of information is only looked for and, therefore, known and, maybe, used, by company
 EFFECTS OF ISO 9000 CERTIFICATION 1183

Table 1. Sample characteristics

Date of first certification Number of

Company by AENOR Employees

Amper S.A. 6/4/99 1537

Asturiana del Zinc S.A. 10/1/93 1270
Banco Bilbao Vizcaya S.A. 19/9/97 572
Banco Central Hispano S.A. 28/1/97 Not available
Banco Zaragozano S.A. 9/6/97 Not available
Bayer S.A. 21/12/99 1106
Bodegas y Bebidas S.A. 11/12/95 Not available
Campofrı́o Alimentación S.A. 7/9/95 9280
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Cementos Portland S.A. 11/12/97 717

Compañı́a Española de Petróleos S.A. 18/3/93 2863
Elecnor S.A. 29/3/95 3132
Ercros S.A. 17/5/94 1063
Fomento de Construcciones y Contratas S.A. 10/12/93 13 511
Gas Natural SDG S.A. 30/7/99 2200
Grupo Dragados S.A. 27/12/93 14 827
Iberdrola S.A. 28/4/95 2395
Koipe S.A. 20/1/95 435
Lingotes Especiales S.A. 24/3/99 478
Omsa Alimentación S.A. 19/6/98 1008
Prosegur S.A. Cı́a. De Seguridad 25/3/96 41 533
Sdad. Española del acumulador Tudor S.A. 9/2/96 2241
Sdad. General Aguas de Barcelona S.A. 25/4/96 1207
Telefónica S.A. 27/12/94 42 627
Tubacex S.A. 25/5/95 1493
Uniland Cementera S.A. 13/7/99 1271
Unión eléctrica FENOSA S.A. 25/11/96 25 777
Unipapel S.A. 4/3/96 1066
Vidrala S.A. 12/6/96 637
Viscofan S.A. 24/6/94 621
Zardoya S.A. 10/12/92 3616

members—including members of the board of directors—and important institutional

investors. Company members obviously know when the company receives the certification.
Institutional investors—since the certification process is a process requiring some time and
is usually announced by the company—would be following the certification process if they
thought that this information was important. Small stock market investors, it was supposed,
use only the most available and outstanding information on companies. In this way, we have
considered that the certification date is a good point at which to establish the event period.
In order to establish the event period, it is necessary to consider that stockholders may
anticipate the event, so they would be incorporating this new information to the stock price
before the event takes place, so the abnormal return would appear previous to the expected
period of time. For these reasons, the day the company passed the exam of the auditor and
got the certification has not been used as the only day for the event period. The event period
will comprise a wider period. Researchers in similar papers with a sample of American
companies take only the day before and after the event day (Adams et al., 1999; Hendricks
& Singhal, 1996). Another study in Spain takes a week (Nicolau & Sellers, 2002). There is
no agreement in the literature about it, the only condition is not to take too long a period
because then it could be very difficult to isolate the event from other exogenous facts. We
have decided to take a week as the event window.
 1184 M. MARTÍNEZ-COSTA & A. R. MARTÍNEZ-LORENTE

In order to avoid possible interferences, the event period for each company was studied.
It was checked that during that period none of the companies suffered from capital expansions,
tender offers, mergers and acquisitions, spin offs, splits, dividend payments and minor events
such as changes in the administration board.

Determination of the estimation period: models of expected returns. The objective with this
methodology consists of analysing if, during the event period, the sample of companies has
obtained abnormal returns. But when is a return considered abnormal? First, it is necessary
to know what would be the normal return of a company, in a normal situation, without any
interference, in order to compare it with the obtained return. In this way, comparing both,
the difference would be a return considered abnormal.
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In order to estimate the normal returns of a company, there are in the literature different
statistic and economic models. Statistic models are more often applied (Martı́n Ugedo,
2003). These models try to establish a pattern of the behaviour of stock returns through the
analysis of their movement during the estimation period. Although this period is often
between 100 and 300 days with daily returns of 24 and 60 months with monthly returns, it
depends on the researcher’s point of view. For the present study, an estimation period of 200
days for every company has been chosen.
For the selection of a model to estimate normal returns, the models applied in similar
studies (Adams et al., 1999; Docking & Dowen, 1999; Hendricks & Singhal, 1996) are the
following.

(1) The mean adjusted model

This assumes that the normal return obtained by a company’s stock on day t (the event day)
is the arithmetic average of its daily return for the estimation period.
Ait óRit ñR̄i
Ait óabnormal return for stock i on day t,
Rit óreturn for stock i on day t,
R̄i óarithmetic average of stock i’s daily return for the estimation period.

(2) The market adjusted model

This model assigns each company the same normal return. This normal return will be the
market returns index on day (period) t. As the model considers all the companies have the
same return (the market return), it assumes all the firms face the same risks. As the levels of
risks are not equal for all the organizations, this model will not be considered in the present
study.
Ait óRit ñRmt
Rmt ómarket return on day t

(3) The market model

The normal return is obtained from a regression that relates the stock returns over the
estimation period for each company with the market return index. Obtained coefficients are
used to calculate a normal expected return during the period event for each stock from the
market return at that point of time.
Ait óRit ñâi ñb̂Rmt
â, b̂óIntercept and slope coefficients obtained from ordinary least squares (OLS) regres-
sions of the company’s daily return on the market’s daily return over the estimation
period.
 EFFECTS OF ISO 9000 CERTIFICATION 1185

Table 2. Models

Company Rit R̄i âòb̂Rmt

Amper S.A. 3 ñ0.0885 2.7817

Asturiana del Zinc S.A. ñ2.7777 ñ0.1482 2.4256
Banco Bilbao Vizcaya S.A. 0.6896 1.1262 1.8111
Banco Central Hispano S.A. 1.3513 0.1417 1.7603
Banco Zaragozano S.A. 7.96221 0.2137 ñ0.3282
Bayer S.A. 0 0.1031 ñ0.0063
Bodegas y Bebidas S.A. 0.49180 ñ0.0349 ñ0.0945
Campofrı́o Alimentación S.A. ñ0.4 ñ0.2131 0.1582
Cementos Portland S.A. ñ0.6297 0.1257 ñ1.5322
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Compañı́a Española de Petróleos S.A. ñ0.2136 0.0195 0.0083

Elecnor S.A. 0.1919 ñ0.1051 ñ0.7469
Ercros S.A. 8 0.3144 0.4418
Fomento de Construcciones y Contratas S.A. 0.5641 0.2888 0.0763
Gas Natural SDG S.A. 4.3209 ñ0.2779 0.6749
Grupo Dragados S.A. 0.6315 0.2401 0.8104
Iberdrola S.A. ñ0.9779 ñ0.0953 0.5693
Koipe S.A. 0 0.1842 0.0903
Lingotes Especiales S.A. 0.7049 0.0206 0.0423
Omsa Alimentación S.A. ñ1.0869 ñ0.1527 ñ0.0320
Prosegur S.A. Cı́a De Seguridad ñ4.8165 0.2392 0.0051
Sdad. Españtola del acumulador Tudor S.A. 0 ñ0.1295 ñ0.3693
Sdad. General Aguas de Barcelona S.A. 1.0135 0.1617 0.5372
Telefónica S.A. ñ4.7923 ñ0.0742 ñ3.479
Tubacex S.A. ñ0.8403 ñ0.1767 ñ2.020
Uniland Cementera S.A. 0 ñ0.0692 ñ0.9979
Unión elétrica FENOSA S.A. 0.9836 0.1267 0.9604
Unipapel S.A. ñ2.8077 ñ0.1891 ñ3.088
Vidrala S.A. 1.2084 0.1688 0.6428
Viscofan S.A. ñ0.9433 0.3463 ñ1.3230
Zardoya S.A. ñ0.2412 ñ0.1088 0.3107

Table 2 shows raw returns and expected returns for each stock on day t, following the models
previously commented.

Determination of abnormal returns: tests for statistical significance. Once the previous steps are
complete, abnormal returns are calculated from the differences between the raw returns in
the event period (real returns) for each company and the forecasts achieved by the procedures
previously described. The objective of this method will be to verify if, during the event
period, there has been a global abnormal return. As a global measure is needed, the abnormal
returns of all 30 companies for each day of the event period will be aggregated to allow the
statistical tests to be applied. For each day it will be:

1 N
Āt ó ; Ai
N ió1

The null hypothesis is that the averaged abnormal return for each day of the event period is
equal at 0. H0 : Āt ó0.
The applicable statistical tests are divided into two groups, the parametric tests, applic-
able when abnormal returns are normally distributed, and non-parametric tests when there
are not. The parametric tests are based on the Student T-test.
 1186 M. MARTÍNEZ-COSTA & A. R. MARTÍNEZ-LORENTE

As the sample size in the present research is Nó30, based on the theorem of Central
limit, it can be assumed that the mean abnormal return will tend to a normal distribution.
However, as 30 is the limit for a sample considered as big, non-parametric tests will also be
applied. A comparison between both results will be made. Tests used in this paper are the
following.

Parametric tests

Share time series test

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As Armitage (1995) points out, this test is adequate for the majority of circumstances. It is
applicable when abnormal returns are calculated by the market model. The test statistic is:
N
; SEit
tó1 Ait
SEit ó
N st

st óEstimation period standard error of regression.

For calculating the statistical significance of periods comprising more than a single day, it is
only necessary to add values of the obtained test for each day and divide by n, where n is
the number of aggregated days (Martı́n Ugedo, 2003).

Non-parametric tests

Sign test
This is based on the assumption that the abnormal returns are distributed around the
average, although the proportion of positive and negative values will be the same. The
calculation is as follows:

 
Nò N
ñ0.5 ~N(0, 1)
N 0.5

N ò ópositive abnormal returns,

Nósample size.

Generalized sign test

This is similar to the previous test. It includes for its calculation the estimation period, not
only the event period. First, the rate of returns in the estimation period is estimated. This
percentage is later applied to estimate the statistic in the event period.
T1
1 N 1
p̂ó ; ; Nò
N ió1 L1 ióT0ò1

L1 ónumber of days in the estimation period,

T0 ófirst day of the estimation period,
 EFFECTS OF ISO 9000 CERTIFICATION 1187

T1 ólast day of the estimation period,

N ò ñNp̂
~N(0, 1)
Np̂(1ñp̂)

Corrado rank test

Armitage (1995) affirms that this test is more powerful than any alternative. It does not
assume that abnormal returns are distributed symmetrically around the mean. For its
calculation, first the rank of abnormal returns for each stock and day, during the estimation
and event period, is established.
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The statistic is the following:

ADt
~N(0, 1)
s(AD)
where Kit óRank of abnormal return of stock I the day t

 
1 N (L òL2 ò1)
ADt ó ; Kit ñ 1
N ió1 2

L2 ónumber of days in the event period,

Kit órank of abnormal return of stock I and day t,


T2
1
s(AD)ó ; AD2t
L1 òL2 iót0ò1

Table 3 shows results for calculations of the test previously explained. These results have
been calculated for the estimation period. The mean adjusted model and the market model
have been used as models of expected return.

Results
After applying this methodology, results obtained show that during the event period there
have been positive abnormal returns, but on most occasions these abnormal returns do not
have statistical significance (Table 3).
In relation to the mean adjusted model, the statistical tests applied have been the non-
parametric tests. At the event day no significant abnormal return seems to appear. However,
looking at the day previous to the event day, the generalized sign test shows that there were
significant positive abnormal returns. The next day to the date of certification does not show
any abnormal result, and the rest of the period does not show any pattern to show that
certification had any effect on share prices.
Looking at the market model, the results obtained differ depending on the statistical
test. After applying the share time series test and Corrado tests, results are not significant
enough to be able to reject the null hypothesis of this study of non-impact of ISO 9000
certification on the stock prices. The generalized sign test offers very different results. As in
the prior model, the sign test does not reject the null hypothesis at the event day or the days
next to it. However, the generalized sign test affirms that at the event day and the day after,
there have been abnormal positive returns.
Regarding the share time series test, abnormal returns for periods superior to a single
 1188
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M. MARTÍNEZ-COSTA & A. R. MARTÍNEZ-LORENTE

Table 3. Results

Panel A: Daily results

Mean adjusted model Market model

Day Rt Sign1 G. Sign2 Rt STS 3 Sign G. Sign Corrado

ñ3 ñ0.0810 0 1.1312 ñ0.3993 ñ0.3938 ñ1.095 0.0127 ñ0.6257

ñ2 ñ0.1745 0 1.13129 ñ0.3738 ñ0.5394 ñ0.7302 0.3855 ñ0.7912
ñ1 0.6762 1.4605 2.6227*** 0.2380 0.7581 0.7302 1.8770 1.2034
0 0.2987 0 1.1312 0.2851 1.888 1.4605 2.6227*** 1.6757
1 0.3670 0.7302 1.877 0.3095 0.4523 1.0954 2.24986** 0.7340
2 ñ0.3586 ñ0.7302 0.3855 ñ0.1823 0.8530 ñ0.7302 0.3855 ñ0.4693
3 0.5512 1.4605 2.6227*** 0.1499 0.2556 0.7302 1.8770 0.8062

Panel B: Cumulative results

(ñ1.1) 1.7891
(ñ2.2) 1.5260
(ñ3.3) 1.2375
(ñ4.4) 1.0353

** Significance at the two-tailed 5%

*** Significance at the two-tailed 1%
1
Sign Test
2
Generalized Sign Test
3
Share Time Series Test
 EFFECTS OF ISO 9000 CERTIFICATION 1189

day can also be analysed, as was described in the methodology section. Panel B of Table 3
sets out the results of this test for different periods of time depending on the aggregation of
days (from 3 days to a week), the event day always staying in its central position. None of
the periods shows enough statistical significance to prove that during that time there could
have been an abnormal increase of returns. In this way, it cannot be sustained that the
average of abnormal returns is different from 0.
In general, these results do not confirm the existence of a positive relationship between
the ISO 9000 certification and the value of a company in the market, except for the
generalized sign test in the market model. Therefore, results are not conclusive, and it is not
possible to sustain that there are any links between information supplied to the market about
certification of a company and the returns that this company obtains in the market.
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Conclusions, limitations and future research

From the results obtained previously, it cannot be affirmed that the acquisition of the ISO
9000 certification by a company implies that the value of the firm in the market rises. It
seems to be that the market does not concede any special attention to the certification.
According to the statement that the value of a company in the market is estimated by the
benefits the stakeholders expect it to obtain in the future, the fact that they do not seem to
show any interest in certification leads us to think that the stakeholders do not consider it as
a source of competitive advantage for the company.
Another recent study into Spanish companies (Nicolau & Sellers, 2002) has investigated
the effect of the announcement of certification to the market through the press and has found
the effect to be positive. These contradictory results could be explained by the fact that
minor investors consider the ISO 9000 certification as a good management tool, while experts
and company members do not believe that certification will lead to benefits. Both articles
(our own and Nicolau & Sellers) together could show us an ‘illusion effect’ for some investors
in relation to the certification. However, given that the stock price does indeed rise when the
certification is announced to the market, why do those who have prior information not buy
beforehand? Or, if they do buy, is it insufficient to raise the price of the stock? The reasons
could be that they do not know whether the market considers the certification positively, they
do not have enough weight to raise the price or they consider certification as a risky benefit
because, in the long-run, there will not be any real effect on the working of the company.
These results would support those obtained by other authors who find that ISO 9000
certification does not have any impact on performance of the company (Terziovski et al.,
1997; Hua et al., 2000; Lima et al., 2000). An explanation of reasons for this fact is not the
object of the present research. What we can conclude is that the institutional investors agree
upon the non-existence of these effects.
Nevertheless, the absence of positive effects would be explained by the fact that the
market could anticipate the certification of the company and previously incorporate the
information in the stock price. As companies in the sample are big companies who are able
to attain certification, it is probable that the positive effect was produced when the company
announced its intention to obtain registration. Another explanation could be the one
suggested in Docking & Dowen (1999) for justifying the non-existence of effects in big
companies, as in the Madrid stock exchange market there are only firms considered big by
Spanish parameters.
The size of the company according to some authors is a relevant variable to obtain
benefits from the certification. A number of studies prove that certification benefits are more
and greater in smaller compared with larger companies (Romano, 2000; Gotzamani &
 1190 M. MARTÍNEZ-COSTA & A. R. MARTÍNEZ-LORENTE

Tsiotras, 2001). Hendricks & Singhal (2001) prove the same relationship with the results of
the Total Quality Management system. Future research should investigate this question more
closely.
The main limitation for the present study is that the sample comprises Spanish companies
certified by AENOR, the main organization in this area in Spain. However, there are other
organizations competing with AENOR. Information from them was not collected. In future
research, the sample could be extended to them. It would also be interesting to carry out a
deeper analysis of the results to find out if, by dividing the sample by sector or size, it would
be possible to obtain more significant conclusions. In the present paper this has not been
possible as the number of companies in the sample is at the limit for applying parametrical
tests. An analysis of the main financial and economic indicators would be interesting to
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investigate whether there are any internal effects of the certification on companies.

Acknowledgements
The authors would like to thank the financial support provided by Fundación Séneca for this
research and an anonymous reviewer for comments.

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