Baldrige Award announcement and shareholder wealth

The value of winning the Baldrige Quality Award to the shareholders of the firm has been the subject of a debate motivated by bipolar perceptions and an opposing set of viewpoints held by both industry leaders and academic professionals. One of the key concerns that must be addressed to place the impact of the Baldrige Award in a proper perspective (and thus contribute to the resolution of this debate on the issue of the value to the shareholders of the winning firms) is the short‐term negative effect imputed by the views and the actions of the critics, especially the short sellers who see the announcement of the award as an opportunity to make profits by short selling the stock. In this study, we focus on this concern and examine the short‐term impact of the Baldrige Award announcement on the shareholder wealth by applying a rigorous statistical methodology to analyze the stock price movements around the day of the announcement of the award for statistically significant abnormal behavior. Our analysis falsifies the critics’ claim that the financial and other resources spent by the companies toward winning the Baldrige Award are wasteful and reduce shareholder wealth.