Quality and financial performance: an applied study on electricity distributors in Brazil

Abstract

Due to its importance for the continuity of business, research has focused on the quality issue, both in search of a definition and practical ideals, and their impact on company operations. This research aimed to verify empirically the possible existence of a relationship between quality and financial performance of companies. Like the study of Forker, Vickery and Droge (1996), this also focused on just one economic sector, in which case the distribution electric power in Brazil. The period of analysis was 2001-2006. The quality indicators used were the DEC and FEC and as indicators of profitability ROA and ROI. For the analysis we employed the hypothesis test for two independent samples. With the results cannot be said that no difference in financial performance between electricity distributors in Brazil that offer the best quality in service and those who have the same lower quality, thus we cannot say that a better service provides a better financial performance. These results differ from studies like that of Forker, Vickery and Droge (1996), which indicates a superior financial performance for companies with products of better quality than the others.