Study on the relationship between TQM implementation and corporate financial performance

Using a sample of public companies that have won China Quality Award from 2001 to 2010 in the mainland of China, this paper investigates the impact of the TQM implementation on financial performance of the firms by using Event study and Panel analysis methods. Our results show that the sales revenue enjoys a significant increase, the ratio of selling cost does not change significantly, while the asset turnover is remarkably increased, and the return on total assets shows a significant decrease since firms have won the quality awards. As companies´ size, capital intensity, financial performance changes of those quality award winners are different. In window periods, smaller firms have better financial performance. While the degree of capital intensity has no significant effect on the financial performance after implementing TQM.