Today’s modern world, firms must equip themselves not only for domestic competition but for international competition as well. With ever increasing global competitiveness, quality and environmental awareness, quality and environmental assurance such as the International Standards Organization (ISO) certification is increasingly becoming more and more important for firms to do business, especially for firms doing business internationally. There is a significant body of literature about ISO 9000 certification and its impact on firms. However, one cannot find an abundance of studies that use the new revised ISO 9000:2000 family of standards and relate the study to firm valuation or market reaction. This study is going to analyze the impact that ISO 9001:2000 certification has on the returns of firms’ shares listed in the New York Stock Exchange, Nasdaq, and AMEX using the event study methodology. The study relates the concepts of cash flow and information asymmetry to stock price reaction in a single study. This study will attempt to provide evidence that there is a positive market reaction for firms receiving the ISO 9001:2000 certification. This study will also attempt to provide evidence that smaller firms will experience more positive market reaction than larger firms when receiving ISO 9001:2000 certification and that high technology firms will experience more positive market reaction than non high-technology firms when receiving ISO 9001:2000 certification. On the sample when taken as a whole, the result and evidence of the event study is relatively weak and does not strongly support the first hypothesis that there will be positive market reaction for firms receiving ISO 9001:2000 certification. Let it be noted, however, that signs of a positive market reaction do exist. On the sample wherein the firms were divided into small and large firms, the result and evidence provided by the event study show support for the second hypothesis that smaller firms will experience more positive market reaction than larger firms when receiving ISO 9001:2000 certification. This finding is strongly supported by the results of the regression analysis. Lastly, the sample was divided into hi-tech and non hi-tech firms. Although the event study do provide some evidence and results that might indicate that hi-tech firms will experience more positive market reaction than non hi-tech firms when receiving ISO 9001:2000 certification, the said evidence and results are relatively weak and does not strongly support the third hypothesis. The results of the regression analysis also do not support the third hypothesis.

Today’s modern world, firms must equip themselves not only for domestic competition but for international competition as well. With ever increasing global competitiveness, quality and environmental awareness, quality and environmental assurance such as the International Standards Organization (ISO) certification is increasingly becoming more and more important for firms to do business, especially for firms doing business internationally. There is a significant body of literature about ISO 9000 certification and its impact on firms. However, one cannot find an abundance of studies that use the new revised ISO 9000:2000 family of standards and relate the study to firm valuation or market reaction. This study is going to analyze the impact that ISO 9001:2000 certification has on the returns of firms’ shares listed in the New York Stock Exchange, Nasdaq, and AMEX using the event study methodology. The study relates the concepts of cash flow and information asymmetry to stock price reaction in a single study. This study will attempt to provide evidence that there is a positive market reaction for firms receiving the ISO 9001:2000 certification. This study will also attempt to provide evidence that smaller firms will experience more positive market reaction than larger firms when receiving ISO 9001:2000 certification and that high technology firms will experience more positive market reaction than non high-technology firms when receiving ISO 9001:2000 certification. On the sample when taken as a whole, the result and evidence of the event study is relatively weak and does not strongly support the first hypothesis that there will be positive market reaction for firms receiving ISO 9001:2000 certification. Let it be noted, however, that signs of a positive market reaction do exist. On the sample wherein the firms were divided into small and large firms, the result and evidence provided by the event study show support for the second hypothesis that smaller firms will experience more positive market reaction than larger firms when receiving ISO 9001:2000 certification. This finding is strongly supported by the results of the regression analysis. Lastly, the sample was divided into hi-tech and non hi-tech firms. Although the event study do provide some evidence and results that might indicate that hi-tech firms will experience more positive market reaction than non hi-tech firms when receiving ISO 9001:2000 certification, the said evidence and results are relatively weak and does not strongly support the third hypothesis. The results of the regression analysis also do not support the third hypothesis.

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