This study investigates whether the capital market values the efficiency of firms. After tracing stock returns and efficiency changes of 399 listed insurance firms in 52 countries during the 2002-2008 period, the paper reports a positive and statistically significant relationship between profit efficiency change and market adjusted stock returns. However, there is no robust evidence that cost e...

Abstract This paper investigates the relationship between profit efficiency, finance and innovation. By adopting stochastic frontiers, we pioneer use of a novel dataset merging firm level survey data with balance sheet information for large sample European companies. We find that firms having difficulties in access to as well introducing product innovation display an incentive improve their eff...