The International Journal of Accounting

40 (2005) 151 – 172

The association between ISO 9000 certification

and financial performanceB
Divesh S. Sharma*
Department of Accounting, Faculty of Business, The Auckland University of Technology,
Private Bag 92006, Auckland 1020, New Zealand

Abstract

This study explores the association between ISO 9000 certification and financial performance
at the organizational level in a mature quality initiative market. It extends the limited literature on
quality initiatives and objective measures of financial performance. The study hypothesizes that
ISO 9000 certification is associated with improvements across three dimensions of financial
performance. These dimensions are operating efficiency, growth in sales, and overall financial
performance. These dimensions of performance are measured using profit margin, growth in sales,
and earnings per share, respectively. Based on data for a sample of 70 companies listed on the
Singapore Stock Exchange over a 6-year period, the results of the study are consistent with the
hypothesized effects. In particular, the results show that the extent of improvement is driven
largely by operating efficiencies and suggests that firms can benefit from ISO 9000 certification if
they are genuinely interested in the quality philosophy by improving their internal business
processes.
D 2005 University of Illinois. All rights reserved.

Keywords: ISO; ISO 9000; Quality; Performance; Internal processes

B
Data availability: all data used in this study are available from public sources.
* Tel.: +64 9 917 9999.
E-mail address: divesh.sharma@aut.ac.nz.

0022-7063/$30.00 D 2005 University of Illinois. All rights reserved.

doi:10.1016/j.intacc.2005.01.011
152 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

1. Introduction

Quality management initiatives such as total quality management (TQM) and just-in-
time systems (JIT) are receiving growing attention in management accounting textbooks.
However, the effect of such initiatives on financial performance has received little
attention in academic research. This is probably because much of the research on quality
and self-reported non-financial firm performance measures are located in the quality
management paradigm. Noting the lack of studies on quality initiatives generally, Maher
(1995) urged accounting researchers to undertake a time-series exploration of the effects of
quality initiatives on organizational performance. However, such research remains scarce
in the accounting discipline. Ittner and Larcker (1995) were among the first management
accounting researchers to study the effect of quality management practices on organiza-
tional performance. Balakrishnan, Linsmeir, and Venkatachalam (1996) and Kinney and
Wempe (2002) investigated the financial impact of JIT systems. Most recently, Nagar and
Rajan (2001) studied the relationship between financial and non-financial indicators of
quality and future sales.
However, it is not easy to establish an empirical relationship between the adoption of
quality initiatives such as TQM and JIT and firm performance that are measured by
accounting variables. The difficulty of establishing an empirical relationship between
TQM and JIT initiatives on firm performance stems from determining the objectivity of
the extent of adoption, the validity of the adoption claims by the firm, and identifying an
adoption date. Easton and Jarrell (1998, p. 256) describe the problem in the context of
TQM as follows:
First, whether or not a firm has seriously pursued TQM cannot be determined by
relying on the firm’s public announcements. Many firms claim to be implementing
TQM when, in fact, they have made essentially no changes (other than in their
public rhetoric). . . . Second, firms seldom publicly announce the beginning of the
deployment of their TQM systems. In fact, there is often no completely
unambiguous start date.
The purpose of this research is to investigate the association between International
Organization for Standardization 9000 (ISO 9000) certification and financial performance
at the organizational level. A study of the effect of ISO 9000 certification on financial
performance alleviates the limitations of prior studies because the certification process
requires compliance with the elements of the ISO 9000 standards. The certification process
is conducted by an approved independent ISO 9000 registrar. If a firm meets the ISO 9000
standards following an audit by a registrar, the firm is issued an ISO 9000 certificate that
includes the scope of certification and the effective date. While certificates are typically
issued for 3-year periods, compliance review is performed every 6 months.
Although ISO 9000 certification has been globally pursued and implemented, very few
studies have explored its impact on objective measures of financial performance. The
literature abounds with studies examining the effect of ISO 9000 certification on self-rated
performance measures such as product quality, defects, employee satisfaction, employee
turnover, customer satisfaction, supplier quality, and productivity, to name a few. While
such studies add to our knowledge about the effects of ISO 9000 certification and quality
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 153

systems on performance, the use of self-rated performance measures is not independent,

suffers from self-reporting bias, and, thus, presents limitations. The implications of self-
rated measures are well recognized in the management accounting literature.
Moreover, the phenomenal growth in the number of companies attaining ISO 9000
certification worldwide suggests certification will yield benefits to the firm.1 The benefits
appear to have been realized because, as noted previously, the literature is replete with self-
rated benefits of ISO 9000 certification. However, whether ISO 9000 certification is
associated with more objective measures of performance remains an empirical issue. If
ISO 9000 certification is not positively associated with financial performance, it may
possibly lose credibility and be regarded as another management fad. It is conceivable that
the self-rated benefits are a self-fulfilling prophecy. Juran (1999), one of the pioneers of
quality concepts, is quite pessimistic about ISO 9000 and has called for research de-
monstrating the financial benefits of the costly ISO 9000 certification process. This study
fills the current void in the literature and addresses an important policy and strategic issue.
Specifically, I investigate the extent to which ISO 9000 certification improves financial
performance at the organizational level and make the following contributions. First, I use
financial performance measures derived from audited financial statements. Prior literature
investigating ISO 9000 effects has focused on self-rated measures of performance that
suffer from inherent bias. Second, prior studies have largely investigated differences in
performance between firms with ISO certification and those without in the post-ISO
period. I extend this literature by providing evidence on ISO 9000 certification and the
extent of improvement in financial performance. I investigate the financial performance of
firms based on data 3 years prior to and 3 years after ISO 9000 certification. I also employ
a benchmark of matched-control firms that never pursued ISO 9000 certification either in
the period of study or 3 years thereafter. This is the most important contribution of the
study as it provides an objective assessment of the impact of ISO 9000 certification on
performance.
Third, I study a range of industries. I do not restrict my sample to manufacturing firms for
the simple reason that ISO 9000 certification is a non-industry specific standard. The ISO
Survey of ISO 9000 lists 39 industries from which companies have attained certification, yet
studies confine their analysis to the manufacturing industry.2 However, I test the sensitivity
of my results to industry membership and find that the results relating to the effects of ISO
9000 certification on performance is not affected by industry membership.
Fourth, I study the certification effect on performance in an emerging market
(Singapore) where the quest for gaining global competitive advantage both within the
region and against firms from developed nations such as Japan, the United Kingdom and
the United States is intense. An emerging market is also studied because there is very little
evidence on quality initiatives outside the major markets such as Japan, the United
Kingdom and the United States (Low, Tan, & Ang, 1999). As multinational corporations

1
Since 1983, the number of ISO 9000 certificates issued has grown from just under 28,000 to over 400,000,
spanning 158 countries in December 2000. As of December 2000, Europe comprised 53.87% of total
certifications with Asia in second place with 20.05%.
2
For details refer to bThe ISO Survey of ISO 9000 and ISO 14000 Certificates—Tenth CycleQ published by the
International Organization for Standardization.
154 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

shift their manufacturing processes to developing nations, such as those in Asia, studying
emerging markets becomes even more critical. In concert, suppliers in emerging markets
are facing increasing pressure from their global customers in the major markets to provide
the highest quality goods and services (Chan, 2000; Quazi, Chang, & Chan, 2002). ISO
9000 certification is a global recognition of achieving high and consistent quality
standards.
Finally, Singapore, as a mature ISO certified nation, provides a suitable context for
investigating whether ISO certification is associated with higher financial performance.3 In
non-mature ISO contexts, the bfirst moverQ to attain certification might experience gains
due to visibility rather than to improvements in its internal business processes. In a mature
ISO context, where most firms are ISO certified and competition is intense, superior
performance would demand genuine improvements to internal processes visible to
customers through higher quality products and value-for-money prices.
The analysis, based on 384 firm-years of data derived from 70 companies listed on the
Singapore Stock Exchange over a 6-year period revealed that the financial performance of
firms achieving certification was significantly greater than non-certified firms. More
importantly, the results indicated that ISO 9000 certification was associated with
significant improvements in financial performance; the control-firm adjusted performance
in the post-ISO 9000 certification period was significantly greater than that in the pre-ISO
9000 certification period. The results are robust to sensitivity and selection-bias tests.
These results imply that ISO 9000 certification possesses economic significance and firms
can enhance performance through certification.
However, the analysis shows that the increase in performance is attributable largely to
improvements in operating efficiency and, to a lesser extent, growth in revenue. Gains in
performance arise, therefore, if firms are genuine in their ISO 9000 implementation
process. The results and more critically the design of the study assist in explaining
inconsistencies in the literature. As with studies of this nature, the results and inferences
drawn ought to be considered in context and with regard to the limitations of the study as
discussed in the concluding section of the paper. The next section provides the background
on ISO 9000 certification and discusses the relevant literature. The research hypotheses are
articulated next followed by the research method. The final two sections present the results
and conclude the study.

2. Background and literature review

2.1. ISO 9000 certification

The strategic management agenda of firms increasingly emphasize quality management

systems. Since the promotion of quality concepts by Crosby, Deming, Ishikawa, and Juran,

3
The rate of ISO certification in Singapore has stabilized at approximately 4,000 companies with most
registrants being small and medium enterprises that are not publicly listed. The number of listed companies in
Singapore was approximately 500 as at November 2001 and many of them are now certified to ISO 9000.
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 155

firms around the globe have gradually embraced quality management practices. One of the
milestones in quality management was the establishment of international standards for
quality. In 1987, the International Organization for Standardization (ISO) issued standards
to establish and foster voluntary adoption of global industrial and manufacturing
standards. ISO 9000 is ba series of international standards dealing with quality systems
that can be used for external quality assurances purposesQ (ISO, 1987). Unlike quality
standards relating to products and services, the ISO 9000 standards apply to the quality
management system. The purpose of the ISO 9000 standards is to ensure that a certified
company maintains a quality management system that will enable it to meet its published
quality standards relating to the processes and activities for delivering goods and services.
The Standards provide guidelines for the development, implementation, and management
of a quality management system. Organizations must document practices that affect the
quality of their products and deliver the procedures consistently to gain and maintain ISO
9000 certification.
In short, ISO 9000 could be viewed as a system for managing internal business
processes from the beginning to the end of a value chain. Certification can only be
confirmed after an independent ISO audit. Regular independent audits are performed to
maintain certification. An unsatisfactory audit will lead to de-registration with subsequent
registration contingent upon meeting the requirements of certification. Therefore,
obtaining and maintaining ISO 9000 certification is a continuous and costly process.
Despite the apparent expense and bother, ISO certification has increased exponentially
in Singapore. Since 1989 at least 3900 organizations have attained certification for ISO
9000. As part of its economic development strategy, the Singapore government continues
to encourage local industries to achieve certification by providing ISO implementation
subsidies (Quazi et al., 2002). In Asia, Singapore is second only to South Korea in quality
initiatives. According to Chan (2000), Singapore has almost reached the highest echelon of
quality management practices by implementing world-class benchmarking systems in the
quest for attaining Global Quality Management status. While these initiatives are
encouraging, the research evidence to date has yet to show that such practices have led
to significant improvements in financial performance not only in Singapore but elsewhere.
The next section reviews this evidence.

2.2. Literature review

The following review of the prior literature is categorized into studies investigating the
effects of ISO 9000 certification on non-financial performance measures and those
investigating the impact on financial performance.

2.2.1. Non-financial performance studies

There is an extensive literature on the effects of ISO 9000 certification on non-financial
performance measures. The review presented here is not exhaustive but representative for
illustrative purposes. Evidence in the literature is mixed. Contextual differences and
management’s motivation for seeking certification explain the inconsistent results observed.
Rao, Ragu-Nathan, and Solis (1997) surveyed companies in China, India, Mexico and
the United States to determine the effects of ISO 9000 certification on quality management
156 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

practices and self-rated measures of non-financial performance. Most (77%) of their

respondents were manufacturers. They concluded that ISO 9000 certification had a
significant impact on quality management practices such as leadership, strategic quality
planning, good supplier relationships and customer satisfaction. They also reported that
ISO certification was significantly related to rework, throughput time, productivity, and
market share.
Elmuti and Kathawala’s (1997) study of two manufacturing plants in a large U.S.
organization showed that the plant with ISO 9000 certification had better and improved
quality of work life compared to the non-certified plant. They also found that ISO 9000
certification increased employee productivity, morale, and goal congruence while it
decreased absenteeism, rework, and defects. Export sales of the plant were also enhanced.
Chittenden, Poutziouris, and Muhktar (1998) found that U.K. firms attaining ISO 9000
certification reported benefits similar to those reported by Elmuti and Kathawala (1997).
Consistent effects have been observed in Northern Ireland (McAdam & McKeown, 1999),
Norway (Sun, 1999) and North America (Simmons & White, 1999).
However, results to the contrary have been reported by Beattie and Sohal (1999), Hua,
Chin, Sun, and Xu (2000), Quazi et al. (2002), Shams-ur (2001), Yamada (2001). Beattie
and Sohal’s (1999) survey of 50 Australian companies showed that 25% of the companies
could not identify any strategic benefits and a mere 4% reported improving their
profitability following certification. Similarly, Shams-ur (2001) noted insignificant
differences in self-rated organizational performance between small- and medium-sized
enterprises (SMEs) with and without ISO 9000 certification in Australia. Hua et al.’s
(2000) survey of 100 companies in Shanghai found no significant differences in quality-
related performance measures between companies with ISO 9000 certification and those
without. Yamada’s (2001) survey of certified Japanese companies could not identify the
effects of ISO 9000 certification on estimated expenses and profits of large companies
listed on the Tokyo Stock Exchange. More recently, Quazi et al.’s (2002) replication of
Rao et al. (1997) revealed that ISO 9000 certification did not affect quality management
practices and quality related measures of companies in Singapore. The lack of expected
relationships was attributed to the nature of the sample as 62% of the respondents were
SMEs. In contrast, the respondents in Rao et al. (1997) were mainly large organizations. A
further explanation for the difference is that SMEs are usually bpushedQ into certification
by their customers and consequently, the real drive towards quality improvement is lacking
(Wiele & Brown, 1997–98).
Low et al. (1999) explain that the motive for attaining certification explains the lack of
observed positive association between ISO 9000 and firm performance. They investigated
whether ISO 9000 certification increased Singaporean contractors’ CONQUAS score. The
CONQUAS score is a system for assessing a contractor’s quality of work. The assessments
were made on site by assessors from the Construction Industry Development Board. They
found that most companies experienced either a fall or an immaterial increase in their
CONQUAS scores. Since the Singapore government gave rebates to ISO 9000 certified
contractors for public tenders, the primary motive for certification was to secure
government projects and rebates in the short term rather than committing to improve
quality in the real sense. The decline in the CONQUAS scores following ISO 9000
certification is consistent with this view.
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 157

2.3. Financial performance studies

To date four studies have investigated the effect of ISO 9000 certification on non-self-
rated financial performance measures derived from financial statements. Simmons and
White (1999) studied 126 U.S. companies in the electronics industry and investigated
whether three financial performance measures (ROA for profitability, sales/equity for
operational performance, and foreign sales) were significantly different between the 63
ISO certified and the 63 non-ISO certified companies. The non-ISO companies were
matched for industry and were not ISO certified in 1995. The performance measures were
derived from the 1995 financial information available from COMPUSTAT. They found
that ISO certified companies were more profitable than non-ISO certified companies but
not with respect to operational performance and level of foreign sales. Simmons and White
(1999) reported that most of the financial gains were attached to larger firms. However,
they did not control for the potential presence of non-ISO firms seeking certification; that
is, firms in the process of attaining certification. The study of just one year data also does
not permit assessing the longer term effects of ISO 9000 certification nor does it allow
them to isolate the effects of performance prior to ISO 9000 certification on post-ISO
certification performance.
Häversjö (2000) argued that quality systems such as ISO 9000 certification would
improve internal and external quality and consequently improve profitability. He
investigated differences in the rate of return of ISO 9000 certified and non-ISO
certified Danish companies.4 His results based on 664 companies showed significantly
higher rate of return for ISO 9000 certified companies than their size-matched
counterparts. The difference in performance between ISO companies and non-ISO
companies was 20% in the year prior to certification and approximately 35% 2 years after
certification. However, similar to Simmons and White (1999), his tests did not isolate the
effects of pre-ISO performance on post-ISO performance; that is, to what extent was the
performance in the post-ISO period due to a continuation of performance prior to attaining
certification? An examination of his tabulated trend analysis shows that the difference in
the 5 year average rate of return between the ISO and control firms was 29.8% prior to ISO
9000 certification and 12% following certification. It therefore appears from Häversjö’s
(2000) data that ISO 9000 certification is not associated with significant financial gains in
the longer term.
More recently, Heras, Casadesus, and Dick (2002) provided evidence of certified
Spanish firms outperforming non-certified firms. Using return on assets (ROA), their
univariate tests show that the ISO 9000 certified firms achieved 24% to 45% higher ROA
than non-certified firms over a 4-year period. However, like the preceding studies, Heras et
al. (2002) did not control for factors (e.g., size, industry, prior performance) likely to
influence performance and do not conduct selection-bias tests. They also do not test
performance before and after ISO 9000 certification. In a subsequent study, Heras, Dick,
and Casadesus (2002) control pre-certification performance in their univariate test and
report that ISO certification does not increase profitability. With the exception of this

4
Häversjö (2000) does not define rate of return.
158 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

control, their study suffers from the preceding limitations that raise questions about the
validity of their findings.
The four studies reviewed above appear to show some short-term differences in
profitability following ISO 9000 certification. However, the studies are unable to
demonstrate that the effects of ISO 9000 certification on financial performance were not
a result of continuation of the pre-ISO 9000 certification performance. That is, they did not
control for pre-ISO 9000 performance when determining post-ISO 9000 performance.
None of the studies performed a selection bias test to determine whether the firms’
underlying characteristics prompted them to seek ISO 9000 certification. If there are
differences in profitability, then it is possible that the effects reported in prior studies have
been overstated. The survey studies on self-reported financial and non-financial measures
have similarly not been able to ascertain that post-ISO 9000 performance had improved
following certification. In this study, I adopt a research design that allows me to test the
extent of improvement in financial performance following ISO 9000 certification and
control for extraneous effects. I also perform sensitivity and selection-bias tests that I
discuss following the main results.

3. Hypotheses development

The literature identifies two fundamental theories that explain possible sources of gains
following ISO 9000 certification. The two theories can be described as Internal
Improvement Theory and External Improvement Theory. Both theories rationalize that
performance in the post-ISO 9000 certification period should exceed performance in the
pre-ISO 9000 certification period.

3.1. Internal improvement theory

The internal improvement theory is based on the rationale that ISO 9000 certification
brings benefits through greater quality awareness among employees (e.g., Brooks, 1995;
Brown & Van der Wiele, 1995; BSI, 2000; Dale, 1994; Peach, 1997), and increased
productivity and efficiency (e.g., Arnold, 1994; Brooks, 1995; BSI, 2000; Buttle, 1997;
RAB, 2000; Reed, Lemak, & Montgomery, 1996). In other words, ISO 9000 certification
seems helpful for companies seeking to improve the quality of their internal business
processes. ISO 9000 certification is frequently regarded as the stepping stone to achieving
total quality in the entire organization (Quazi et al., 2002). The following sub-sections
briefly articulate drivers of quality-related improvements in a firm’s internal business
processes.

3.1.1. Quality awareness

Quality-conscious employees understand the importance of producing high-quality
output and are capable of executing the operations with that objective in mind. ISO 9000
facilitates this objective by providing bguidelines for developing a quality system and the
process of acquiring certification impose a certain level of discipline on an organizationQ
(Carr, Mak, & Needham, 1997, p. 387). Consequently, a company accredited with ISO
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 159

9000 is dedicated to maintaining a high-quality environment. Hence, workers would

experience fewer problems on the job and consequently increase their motivation and job
satisfaction that ultimately manifests in better financial performance.

3.1.2. Productivity and efficiency

Productivity and efficiency relate to the rate at which goods and services above
minimum satisfactory levels can be delivered to customers. Throughput rate and similar
measures of productivity and efficiency increase when employees are aware of quality
objectives, and when they are motivated and share common strategic visions. Marquardt
(1992) provides evidence consistent with this view. Given the improvements in
productivity and efficiency following certification, it is inferred that ISO 9000 certification
reaps cost savings by eliminating non-value-added activities, reducing scrap, rework, and
warranty claims. In summary, the internal improvement theory suggests ISO 9000
certification would improve internal business processes such that production becomes lean
and costs decline.

3.2. External improvement theory

Although internal quality improvements are imperative, companies cannot ignore the
needs and responses from the market (Lisiecka, 1999). After all, the purpose of a company
is to maintain and increase profits and its survival is contingent on its ability to satisfy
customers and sustain competitive advantage (Carr et al., 1997). In other words, a
company’s improvement must not be observable only from inside the organization; its
external business partners should also be able to recognize the change and its quality.
While the pursuit for ISO 9000 accreditation may reflect an organization’s strategic
intent to be quality-focused, research indicates that the driving force could essentially be
customers’ expectations and contractual requirements (e.g., Brown & Van der Wiele,
1995; Rayner & Porter, 1991). Companies bstampedQ with the quality logo increase
customer confidence and help speed up the supplier-selection process (Dale, 1994;
Yamada, 2001). Consequently, ISO 9000 certified firms are likely to increase their
customer base and market share and, therefore, sales. These coupled with internal-process
improvements could lead to improvements in overall financial performance.
The preceding discussion and the literature review suggest that gains in financial
performance are available through ISO 9000 certification. In the current competitive
environment many firms are seeking ISO 9000 certification to improve their internal
business processes for competitive advantage. Conceptually, the balanced-scorecard
framework would suggest that improvements to internal processes could lead to enhanced
financial performance. Given that certification to ISO 9000 is evidence of improvements
to the quality management system driving a firm’s internal processes, it follows that ISO
9000 certification is associated with increased financial performance.
The balanced-scorecard framework also suggests that customer satisfaction is
associated with sales revenue. This is the drive that comes from the firm’s external
environment. Finally, the balanced-scorecard framework relates improvements to the
internal business processes to greater customer satisfaction and consequently better
financial performance. The theories underpinning ISO 9000 certification and the balanced-
160 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

scorecard framework suggest the motivation for ISO 9000 certification could be either
internal or external or both. Therefore, I specify three hypotheses.
Hypothesis 1 relates ISO 9000 certification to internal efficiencies and Hypothesis 2
refers to external effects. Hypothesis 3 reflects the belief that the benefits of ISO 9000
certification exceed its cost such that overall financial performance increases as a result. I
use return on sales (earnings before interest, tax, and extraordinary items divided by net
sales) as the financial measure for efficiency. I use growth in sales to capture the effect of
the external improvement theory. Finally, I use earnings per share (operating income after
tax divided by number of ordinary shares issued) to capture the overall improvement in
financial performance related to ISO 9000 certification. Hence, I formulate the following
three hypotheses:
H1. The financial efficiency (profit margin) of firms improves with ISO 9000 certification
and is greater than firms without ISO 9000 certification.
H2. The growth (sales growth) of firms improves with ISO 9000 certification and is
greater than firms without ISO 9000 certification.
H3. The overall financial performance (earnings per share) of firms improves with ISO
9000 certification and is greater than firms without ISO 9000 certification.

4. Research design

4.1. The sample

All Singapore incorporated companies listed on the main and secondary boards (SGX
and SESDAQ) were identified for ISO 9000 certification from information held by the
Productivity and Standards Board. Companies that were ISO 9000 certified after 1998
were eliminated because the study requires at least 3 years of post-certification data. I
required 3 years of post-certification data to capture the benefits following a sufficient
bgestationQ period. Prior studies have not allowed a sufficient time for the effects of ISO
9000 certification to be realized. The primary data set included financial data through
fiscal years ending December 31, 2000. Thus, companies listed after 1994 could not be
included. Furthermore, companies incorporated overseas were eliminated from the sample
due to an inability to establish their ISO 9000 certification status. Industries without any
ISO 9000 certified companies were also omitted. Because I matched the ISO 9000
certified companies with a non-certified company (discussed below), companies that were
in the process of attaining certification were excluded from the non-ISO matched sample. I
determined this by referring to company websites, print media, and phone calls. Finally,
ISO 9000 certified companies in industries without any non-ISO 9000 certified companies
were eliminated. Forty companies did not have the required information and were thus
eliminated. These procedures yielded a sample size of 52. To increase the sample size, 18
companies with at least 2 years pre- and 2 years post-certification data were added. Thus,
the final sample size was 70 comprising 35 ISO 9000 certified and 35 matched non-ISO
certified companies. Table 1 summarizes the sample-selection process.
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 161

Table 1
Sample selection process
Reason for elimination from the sample No. of firms
Total listed companies on SGX and SESDAQ as at 28 November 2001 493
Company was listed after 1994 (222)
Company was ISO 9000 certified after 1998 (6)
Company was partially ISO 9000 certified (16)
Company was incorporated overseas (56)
Industry without ISO 9000 certified companies (e.g., diversified industry, (57)
investment, finance)
Excess unmatched non-ISO 9000 certified companies (39)
ISO 9000 certified companies without matched non-ISO 9000 certified (5)
companies
Full set of financial data not available (3 years prior to and 3 years (40)
following the year of ISO 9000 certification)

Remaining in the sample 52

Companies added with most complete set of financial data (minimum 18
2 years prior to and 2 years following the year of ISO 9000 certification)
Total sample size 70

The distribution of ISO 9000 certification over the 8-year period was quite even, with
the exception of 1994 which recorded the highest number of certifications. This is
mostly due to the Singapore government bdemandingQ certification for construction
firms’ eligibility to undertake large government projects. There was one certification in
1991, two in 1992, three in 1993, 11 in 1994, four in 1995, five in 1996 and 1997, and
four in 1998. The sample was represented by the following industries; services 28%,
engineering and machinery 26%, construction 20%, electronic and electrical 14%,
packaging 6%, food producers 3% and household goods 3%. I conducted sensitivity
tests for industry and year effects and found the results relating to the effects of ISO
9000 certification on financial performance were robust. The relevant results are reported
in the Results section of the paper.

4.2. Research design and test variables

4.2.1. Matched control sample

As the study is concerned with the effects of ISO 9000 certification on financial
performance, I employ a sample of ISO certified firms and matched non-ISO certified firms.
The matched control firm also assists control for economy-wide and industry factors.
Consistent with Simmons and White (1999), matched firms were selected based on industry
classification and asset size. Matching on size also controls for the capability of firms to
embark on the ISO 9000 certification process. Larger firms with greater resources and access
to capital markets are capable of and committed to investing in long-run quality processes. A
paired t-test of differences in size (total assets in year 0) between ISO 9000 certified and non-
ISO 9000 certified firms was not significant (t = 0.756, p N 0.10). This suggests that the firms
were appropriately matched. While I did not match the firms on their performance over the 3
years prior to certification, the data in Panel A of Table 2 shows the performance of the ISO
162 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

9000 certified and non-ISO 9000 certified firms do not significantly differ in the 3-year
period prior to the certification year. Recognizing that more profitable and growth firms have
incentives and the financial capacity to attain certification, I conducted self-selection bias
tests and found that the results relating to the effects of ISO 9000 on performance are robust.
Results of this test are reported in the Results section of the paper.

4.2.2. Test design

In recognition that the pre-ISO 9000 certification and post-ISO 9000 certification
performance could be due to economy-wide and industry factors, or a continuation of firm-
specific performance prior to ISO 9000 certification, I employed an adjusted performance
measure when evaluating the effects of ISO 9000 certification on performance. The
control-adjusted performance measure is computed as illustrated in Fig. 1. First, I derived
a pre-ISO adjusted value (X) by comparing the financial performance for each ISO 9000
certified firm with its matched non-ISO 9000 certified firm for the 3 years prior to the
certification year. Similarly, I derived a post-ISO adjusted value ( Y) by comparing the
financial performance for each ISO 9000 certified firm with its matched non-ISO 9000
certified firm for the 3 years following the certification year.
Second, I evaluate the difference between the pre-ISO adjusted value (X) and the post-
ISO adjusted value ( Y) as shown in Fig. 1 to determine the extent of improvement due to
ISO 9000 certification. The test design attempts to control for the effect of economy-wide
and industry factors and pre-ISO 9000 certification performance on post-ISO 9000
certification performance. This design ensures, ceterus paribus, that the difference in
financial performance between the pre- and post-ISO 9000 certification periods relates to
ISO 9000.5

4.3. Test variables

I use financial ratios to measure company performance. The approach is to use pre- and
post-certification accounting data to test for changes in company performance. The ratios
are computed for every company up to 3 years prior and 3 years subsequent to the
certification year. Since this study is investigating whether ISO 9000 certification is
associated with economic gains, the financial ratios selected reflect whether the source of
the effect is internal or external. The three ratios used in this study focus on efficiency

5
A more complete and rigorous design would include ISO registered firms not continuing registration. The
inclusion of such firms for comparative purposes would assist in ascertaining whether ISO certification was
optimal, particularly for firms without ISO. However, the results of this study show that firms without ISO
certification are significantly outperformed by their ISO certified counterparts following certification.
Nevertheless, I discussed deregistration by ISO firms with the CEO and Vice President of the largest ISO
authority in Singapore. The discussions revealed that firms very rarely deregister or not continue registration. The
most common reasons for deregistration included relocation outside Singapore, terminating activities or winding
up. Deregistration for publicly listed companies was the most rare; in fact the CEO and Vice President could not
recall the deregistration of any company over the last few years. They explained that given their visibility, public
companies do not deregister because of potential economic consequences both from trading partners and internal
efficiencies. In short, the benefits of ISO 9000 certification are seen as valuable in Singapore and the lack of
deregistration data does not allow me to study firms discontinuing ISO 9000 registration.
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 163

ISO Firm Control ISO Firm Minus Control

Pre-ISO Minus Firm Post-ISO Firm

Pre-ISO Post-ISO
Adjusted Value (X) Adjusted Value (Y)

t = -3 t = -2 t = -1 ISO 9000 t=1 t=2 t=3

Certification
Year
t=0

Fig. 1. Design for computation of test variables.

(profit margin/return on sales) as an internal source of gains, revenue (sales growth) as an

external source, and profitability (earnings per share) as overall financial performance
giving returns to shareholders. All three measures of performance indicate whether ISO
9000 certification is a value-increasing event that is associated with real economic gains.
The focus on efficiency, revenue and profitability is consistent with prior studies and the
theoretical relationships between ISO 9000 certification and financial performance
advanced earlier. Since the hypotheses are directional, all tests of improvements in
performance are based on a one-tailed test. Following Fig. 1, Eqs. (1), (2) and (3) test the
extent of improvement in performance where DGSALES, DEPS, and DPM reflect
differences captured by X and Y in Fig. 1:
DGSALES ¼ ðGSALESISOPOST  GSALESNISOPOST Þ

 ðGSALESISOPRE  GSALESNISOPRE Þ ð1Þ

DEPS ¼ ðEPSISOPOST  EPSNISOPOST Þ  ðEPSISOPRE  EPSNISOPRE Þ ð2Þ

DPM ¼ ðPMISOPOST  PMNISOPOST Þ  ðPMISOPRE  PMNISOPRE Þ ð3Þ

where: ISOPOST = performance measure for ISO 9000 certified firm in the post-ISO
9000 certification period; ISOPRE = performance measure for ISO 9000 certified firm in
the pre-ISO 9000 certification period; NISOPOST = performance measure for control
firm (non-ISO 9000 certified) in the post-ISO 9000 certification period; NISOPRE =
performance measure for control firm (non-ISO 9000 certified) in the pre-ISO 9000
certification period; GSALES = growth in net sales measured over the 3-year period
either in the pre-ISO or post-ISO certification period; EPS = earnings per share defined
as operating income after tax divided by number of ordinary shares issued; and
PM = profit margin defined as earnings before interest, tax, and extraordinary items
divided by net sales.
164 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

Table 2
Mean differences between ISO 9000 certified and non-ISO 9000 certified firms (n for mean value
calculation = 384 firm-years)
Panel A: Three-year mean differences between ISO 9000 certified and non-ISO 9000 certified firms prior to
certification
Variable ISO Non-ISO t-value p (two-tailed) p (one-tailed)
GSALES# 0.575 0.452 0.653 0.518 ns
EPS 0.202 0.305 0.641 0.526 ns
PM 0.076 0.081 0.167 0.869 ns

Panel B: Three-year mean differences between ISO 9000 certified and non-ISO 9000 certified firms following
certification
Variable ISO Non-ISO t-value p (two-tailed) p (one-tailed)
GSALES# 0.221 0.036 1.057 0.298 ns
EPS 0.208 0.048 2.366 0.024 b0.01
PM 0.036 0.048 2.082 0.045 b0.025

Panel C: Control-firm adjusted mean differences between the 3-year pre-ISO 9000 certification period and 3-year
post-ISO 9000 certification period
Variable Pre ISO X Post ISO Y t-value p (two-tailed) p (one-tailed)
GSALES# 0.134 0.187 0.209 0.836 ns
EPS 0.103 0.161 1.770 0.086 b0.05
PM 0.005 0.085 2.078 0.045 b0.025
GSALES = 3-year net sales growth; EPS = operating income after tax divided by number of ordinary shares
issued; PM = earnings before interest, tax and extraordinary items divided by net sales, ns = not significant,
# = after removal of outlier effects, X and Y = refer to Fig. 1.

4.4. The data

The financial reports of the 35 ISO 9000 certified companies and 35 non-ISO 9000
certified companies were obtained for up to 3 years prior and 3 years after the ISO 9000
certification year. Fifty-two companies had data for the complete 6-year period and 18
companies had data for four continuous years (see Table 1). Therefore, a total of 384 firm-
year data were used. All data were hand collected.

5. Results

Panel A in Table 2 presents mean-difference statistics for the three performance

measures for the period prior to certification. The data shows that none of the 3-year
average performance measures are significantly different.6

6
I removed two outliers (greater than two standard deviations from the mean) from GSALES. These related to
the non-ISO group. The matched ISO firms were also removed. Including the outliers resulted in a significant
( p b 0.10) difference in GSALES with higher growth for the non-ISO group (mean = 7.216) than the ISO group
(mean 0.568). Subsequent analysis excludes the outliers.
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 165

350

300

250

200
$million

150

100

50

0
-3 -2 -1 0 1 2 3
year
ISO NON-ISO

Fig. 2. Total revenue mean value plots for ISO 9000 certified vs. non-ISO 9000 certified firms.

Panel B of Table 2 presents the results for differences in performance in the post-ISO
certification period. The data suggests that the ISO 9000 certified companies had
significantly better performance for GSALES, EPS, and PM. The differences were
significant for EPS ( p b 0.01) and PM ( p b 0.05). In order to identify the extent of
improvement in performance and control for differences due to economic factors, tests
were conducted on the control-adjusted performance measures (X and Y shown in Fig. 1).
The results for these tests are shown in Panel C.

0.5

0.4

0.3

0.2
cents

0.1

0
-3 -2 -1 0 1 2 3

-0.1

-0.2
year
ISO NON-ISO

Fig. 3. EPS mean value plots for ISO 9000 certified vs. non-ISO 9000 certified firms.
166 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

0.15

0.1
percentage
0.05

0
-3 -2 -1 0 1 2 3

-0.05

-0.1
year

ISO NON-ISO

Fig. 4. Profit margin mean value plots for ISO 9000 certified vs. non-ISO 9000 certified firms.

When differences of the pre-mean (X) and post-mean ( Y) for the three performance
measures are considered, GSALES is not significantly different. EPS and PM however
show significant ( p b 0.05) differences. The difference in the control-adjusted performance
measures for EPS and PM show that ISO 9000 certified companies significantly improved
their performance over the pre-ISO period and perform better than their matched non-ISO
9000 certified company.
The tabulated financial performance results are supported by trajectories reported in
Figs. 2, 3 and 4. Fig. 2 shows ISO 9000 certified firms report increasingly greater total
revenues than non-ISO 9000 certified firms in the years following certification. Similarly,
trajectories for EPS and PM in Figs. 3 and 4, respectively, show differences between the
ISO 9000 certified firms and non-ISO 9000 certified firms in the years following
certification.

5.1. Multivariate analysis

There are two limitations of the univariate tests reported above. First, it does not
control for other factors that affect firm performance. Second, the mean difference test
assumes that the rate of change in the pre-ISO 9000 certification measures is equivalent
to the post-ISO 9000 certification measures. I address these limitations through a
multivariate analysis by regressing post-ISO certification performance on pre-ISO
certification performance, company size (SIZE: log of total assets), major source of sales
revenue (SOURCE: foreign = 1 or local/regional = 0), age of the company (AGE: number
of years listed on SGX or SESDAQ), and ISO status (ISOStatus: ISO 9000 certified = 1
and non-ISO 9000 certified = 0). I include AGE because Finley and Buntzman (1994)
argued that the age of a company influences its performance. Company SIZE is included
to control for size effects on performance. SOURCE of sales was included because
Singapore companies have domestic and international markets and these can influence
their performance and motivation for seeking ISO 9000 certification. Three OLS
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 167

regressions were estimated for each performance measure. The models took the
following general form:

Post-ISOPerf i ¼ a þ b1 SOURCE þ b2 SIZE þ b3 AGE þ b4 Pre  ISOPerf i

þ b5 ISOStatus þ e ð4Þ
Where Perfi represents each of the three performance measures; GSALES, EPS, and
PM. Since Hypotheses 1 to 3 posited greater financial performance of ISO 9000 certified
firms relative to non-ISO 9000 certified firms, the coefficient of interest is b 5 and the
test criteria is b 5 N 0. The coefficient of interest, b 5, measures the change in the mean
value of the relevant performance value (Post-ISOPerfi ) if a firm is ISO 9000 certified
relative to a firm not certified, after controlling for the influence of other factors likely to
affect performance. Table 3 presents the regressions results.
For each financial performance measure, the pre-ISO 9000 certification performance
measure is statistically significantly associated with the post-ISO 9000 certification
performance. These observations confirm the belief that past performance is related to
future performance and that such effects need to be controlled. They also confirm that
prior studies are limited to the extent that they have not isolated the effects of prior
performance on post-ISO 9000 certification performance and have overstated certification
effects.
The coefficient, b 5, on the variable of interest, ISOStatus, is positive and statistically
significantly associated with GSALES (b 5 = 0.130, t = 2.249, p b 0.05), EPS (b 5 = 0.279,
t = 2.577, p b 0.05), and PM (b 5 = 0.282, t = 2.393, p b 0.05). The results for ISOStatus
suggests that after controlling for prior performance and other factors, ISO 9000
certification is significantly associated with performance. These results are consistent with
the three research hypotheses that collectively posit post-ISO 9000 certification perform-
ance is greater than the pre-ISO 9000 certification performance.

Table 3
OLS results for effect of ISO 9000 certification on financial performance
Variable Expected GSALES EPS PM
Beta (t value) Beta (t value) Beta (t value)
Constant ? 37.500 (0.609) 34.615 (1.290) 22.869 (1.613)
SOURCE ? 0.016 (0.270) 0.068 (0.619) 0.019 (0.157)
SIZE + 0.180 (2.281)** 0.256 (2.230)** 0.062 (0.497)
AGE ? 0.036 (0.606) 0.147 (1.309) 0.198 (1.623)
Pre-ISOPerf + 0.751 (10.178)*** 0.360 (3.364)*** 0.183 (1.577)*
ISOStatus + 0.130 (2.249)** 0.279 (2.577)** 0.282 (2.393)**
Adj. R 2 0.790 0.231 0.084
Model F 51.445*** 5.152*** 2.257*
Post-ISOPerfi = a + b 1SOURCE + b 2SIZE + b 3AGE + b 4Pre-ISOPerfi + b 5ISOStatus + e.
SOURCE = 1 for majority foreign sales and 0 for regional/local sales; SIZE = log of total assets; AGE = number of
years listed on SGX/SESDAQ, Pre-ISOPerfi = Pre-ISO GSALES: 3-year mean net sales growth for the Pre-ISO
certification period, Pre-ISO EPS: 3-year mean earnings per share for the Pre-ISO certification period, and Pre-
ISO PM = 3-year mean profit margin for the Pre-ISO certification period; and ISOStatus = 1 for ISO 9000 certified
and 0 for non-ISO certified firms. ***p b 0.01, **p b 0.05, *p b 0.10. All tests one-tailed except as indicated.
168 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

Furthermore, b 5 suggests that ISO 9000 certification increases the mean value of
GSALES by 13%, EPS by 28% and PM by 28%. These effects suggest that the benefits of
ISO certification come largely from internal efficiencies rather than from external sources
such as growth in sales. In a highly competitive market and mature ISO context such as
Singapore, benefits of ISO are more likely to flow from internal sources. The ISO
companies appear to have significantly improved their performance relative to their non-
ISO counterparts through a genuine commitment to and implementation of quality-
improvement processes. These results also suggest that improvements to performance in
mature ISO contexts are likely to result from continuous enhancements to internal business
processes.

5.2. Sensitivity analysis

I explored the effects of industry membership and year of ISO 9000 certification on the
results reported in Table 3. Since the Singapore government provided incentives to
companies in the building and construction industry that attained ISO 9000 certification, it
is possible that the motive for such companies differs from the motives for companies in
other industries seeking ISO 9000 certification. In addition, companies in the
manufacturing industry may seek certification in response to customer demands. I classify
companies into three broad industry groups; construction, manufacturing, and service and
test for industry effects using two dummy variables in the OLS (Eq. (4)). For the three
performance measures I found that the results (not tabulated) pertaining to the effects of
ISO 9000 certification are consistent with those reported in Table 3. That is, ISO 9000
certification continues to have a positive and significant (at least at p b 0.025) effect on
post-ISO 9000 certification performance after controlling for industry effects.7
Similarly, for year effects I used a dummy variable that was coded 1 for firms that
attained ISO 9000 certification in 1994 and 0 otherwise. In 1994, 11 (31%) of the
companies in my sample attained ISO 9000 certification, whereas other years had similar
occurrences of certification. Inclusion of year effects in the OLS (Eq. (4)) did not affect the
results relating to the effects of ISO 9000 certification on post-ISO 9000 certification. The
year effect was also not significant ( p N 0.10) for any of the three performance measures.
Inclusion of industry and year effects together in the OLS (Eq. (4)) produced results
consistent with their effects when isolated.

5.3. Self-selection bias test

The results reported above ignore self-selection inherent in the ISO 9000 certification
decision. If firm characteristics that motivate ISO certification are associated with better
financial performance, then it is likely that the results observed overstate the effects of ISO
9000 certification on performance. Following Kinney and Wempe (2002) and Maddala
(1977), I investigated effects of endogeneity using a two-stage self-selection procedure. In

7
The construction industry variable had a negative and significant ( p b 0.05) effect on post-ISO 9000
performance for PM and EPS, while the manufacturing industry variable had a negative and significant
( p b 0.052) effect on post-ISO 9000 performance for GSALES.
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 169

the first stage, I employed the following PROBIT analysis of ISO 9000 certification choice
where the variables are as previously defined:
ISOj ¼ a þ b1 SOURCEj þ b2 SIZEj þ b3 AGEj þ b4 GSALESPREj
þ b5 EPSPREj þ b6 PMPREj þ uj ð5Þ
I included SOURCE, SIZE, and AGE for reasons explained earlier. I included the three
pre-ISO 9000 certification measures of financial performance because firms with superior
performance are likely to seek certification to maintain their performance and, due to their
superior performance, they would be able to afford such initiatives. It is also possible that
firms with lower performance seeking superior performance may attain certification. For
example, firms expanding their market may seek ISO certification for strategic purposes
while those seeking to improve efficiency may also go for certification. ISO 9000
certification and improvements to internal business processes are likely to benefit such
firms. ISO was coded 1 for firms that attained certification and 0 otherwise. The
unreported results indicated no significant effect for any of the variables at p b 0.10. This
suggests that the sample firms were relatively homogenous. The second stage test
comprised of separate analysis for the two sub-samples of ISO 9000 certified and non-
certified firms. The following model was estimated for each of the three financial
performance measures:

Post-ISOPerf i ¼ a þ b1 SOURCE þ b2 SIZE þ b3 AGE þ b4 Pre  ISOPerf i

þ b5 MISOðNISOÞ þ e ð6Þ

In Eq. (6), M ISO and M NISO are selectivity variables. For the ISO certified sub-sample
equation, M ISO is f(bVZ) H F(bVZ) and for the non-certified sub-sample M NISO is
f(bVZ) H (1F(bVZ)). bVZ is the prediction from the first-stage PROBIT model and f(d ) and
F(d ) are the density and distribution functions of the standard normal distribution.8 The
test condition for selectivity bias is a negative and significant b 5. The unreported results
indicated that for each of the three performance measures for both sub-samples b 5 was not
significant at p b 0.10. Thus, there is no evidence to suggest that self-selection bias affects
the results.

6. Conclusion

This study sought to investigate whether ISO 9000 certification is associated with
financial performance measures at the organizational level. The study makes several
contributions to the literature. First, using a sample of 35 ISO 9000 certified firms
across a range of industries and 35 non-ISO certified companies matched on size and
industry, I investigated whether ISO certification was associated with improvements

8
For a comprehensive discussion of the self-selection bias tests, refer to Maddala (1977, pp. 351–366, 1983,
pp. 257–290).
170 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172

(as opposed to differences between ISO and non-ISO firms at a point in time) in
objective measures of financial performance such as EPS, Profit Margin, and Growth
in Sales. I employed an appropriate design that permitted investigating the extent of
improvement in performance following ISO certification. Second, the relationship
between ISO 9000 certification and performance was investigated in an emerging
market that had a mature ISO outlook. A mature ISO context enabled me to study the
real benefits of ISO 9000 certification arising from improvements to the internal
business processes rather than due to a bfirst moverQ effect. In doing so, this study
provides the first reliable evidence of the impact of ISO 9000 certification on financial
performance at the organizational level.
The results of this study provide evidence that ISO 9000 certification is associated
with improvements in financial performance. They suggest that ISO 9000 certification
does bring benefits to the firm and its stakeholders. Specifically, the multivariate tests
showed that ISO 9000 certification is associated with significant improvements in profit
margin, growth in sales, and earnings per share. However, the effect of ISO 9000
certification was greater on profit margin than on growth in sales. This suggests that the
improvement in overall performance is attributed largely to improvements in internal
business processes. Thus, in a mature ISO context such as Singapore, ISO 9000
certification appears to affect firm performance through internal sources focused on
improving quality-related processes. It appears from the data analyzed in this study that
ISO 9000 could be an important strategic initiative because it does impact the bottom
line through enhancements to internal business processes. Firms not certified but
considering ISO 9000 certification are likely to benefit financially from attaining ISO
status. Finally, the evidence here also suggests that ISO 9000 has credibility and
supports the literature on the self-rated benefits of ISO 9000.
There are a few limitations in this study. First, the results of this study are not
generalizable to non-listed companies and SMEs. Future research could consider such
companies because they play major roles in world economies. However, data
availability is likely to limit such investigations. Second, I cannot rule out the
possibility that other variations in firm characteristics and endogenous factors
influenced the observed performance differences.9 More complex and intricate models
are required to explore such effects and are left to future research. Third, due to the lack of
objective and sufficient information, the study did not examine other financial measures
such as inventory turnover, cost of goods manufactured/services provided, and internal
and external failure costs that could more directly capture the effects of ISO 9000
certification. Other financial performance measures such as EVA could be considered.
Future research could investigate the causal effects of ISO certification on non-financial
measures and consequently on financial measures. Fourth, the period of the study was
one where Singapore companies implemented other quality initiatives such as JIT,
total quality management, and cellular manufacturing technology. The extent to
which these practices varied between the ISO and non-ISO certified companies and

9
This is a common, inherent limitation of studies examining the association between quality initiatives and
performance (see also Balakrishnan et al., 1996; Ittner & Larcker, 1995; Kinney & Wempe, 2002; Simmons &
White, 1999).
 D.S. Sharma / The International Journal of Accounting 40 (2005) 151–172 171

within the ISO certified firms could not be determined. Therefore, the results of the study
must be interpreted cautiously. Future research could explore the effect of quality
initiatives and ISO certification on financial performance. Finally, no attempt was made to
investigate the effect of types of ISO 9000 certification on performance due to limited
information and the small sample size. This is another issue that could be explored in
future research.

Acknowledgements

I wish to thank to Pei Szu, Li Pei, and Hui Rong for their research assistance and Hesan
A. Quazi for his comments.

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