Abstract
There is little study which examines the relationship between quality improvement activities in Japanese manufacturing firm and its financial performance empirically. In this paper, we use certification of ISO9000, quality management systems standards, as an indicator of quality improvement activities. We employ event-study method to examine the impact of seeking ISO9000 certification at early stage on financial performance of Japanese manufacturing firm. The findings indicate that financial performance, which is return on assets (ROA) and cost of good sold divided by sales (COGS/SALES), is improved from the year of certification to one year later. However, the effect of improvement deteriorated year after year. In contrast, from two year to one year before certification, we find that there is negative effect of certification on financial performance, which is ROA and COGS/SALES. In addition, we do not find any significant impact of certification on relative growth in sales.
