The authors investigate whether movement in a firm's stock price, that
is, a measure of firm value, is associated with information contained
in perceived quality measures. In a model that also allows for the ef
fect of economywide factors and a firm's return on investment, they fi
nd a positive relationship between stock return and changes in quality
perceptions. These results imply that the quality measure contains in
formation, incremental to that reflected by current-term accounting me
asures, about future-term business performance. They suggest that mana
gers should convey information to the stock market, such as the brand'
s quality image, useful in depicting the long-term prospects of the bu
siness. By doing so, the stock market will rely less on short-term mea
sures of business performance, and managers will be freer to undertake
strategies necessary for ensuring the long-term viability of their fi
rms.