The Impact of Business Intelligence Systems on Stock Return Volatility

Abstract

Business Intelligence (BI) systems support decision-making and information sharing within increasingly complex organizational environments. As investment in these systems is steadily increasing in a wide range of industries, it is important to understand the effect they have on companies. We claim that BI systems impact companies in two important ways: 1) they stabilize the decision-making process, and 2) they increase the visibility of company information to stakeholders. With BI decisions become increasingly data based and reports available to stakeholders become more informative. This in turn, can lead to more consistent and predictable company performance. Hence, we hypothesize that BI systems can help to reduce the company's stock return volatility. To test this hypothesis, we have conducted an empirical analysis on a sample of firms that have deployed a BI system. The results indicate a significant reduction in stock return volatility after BI deployment.

Keywords: Business Intelligence, Stock Return Volatility, Decision Support, Information Availability