Stock Market Valuation of IT Implementations: An Empirical Study of Mobile App Investments

38 Pages Posted: 8 Mar 2019 Last revised: 30 Jan 2023

See all articles by Ziqing Yuan

Ziqing Yuan

The University of Hong Kong

Hailiang Chen

HKU Business School, The University of Hong Kong

Choon Ling Sia

City University of Hong Kong

Date Written: January 2023

Abstract

Considerable research has examined the impact of IT-related investments on firm value by studying the stock market reaction to such announcements. Due to the unavailability of data on implementation dates, few studies evaluate the stock market reaction to the actual IT implementations. Leveraging a novel dataset in the mobile app market, we investigate the impact of IT implementation on firm value with a sample of 761 public firms that released their first mobile app between 2008 and 2017 on Apple’s App Store and Google Play. We find that, on average, these firms experience a negative abnormal stock return on the day they release their first mobile app, and the value creation process is highly contingent on a firm’s disclosure behavior, market position, IT capabilities, and entry time. Additional analyses to test several alternative explanations show that the negative impact is mainly due to the technology immaturity.

Keywords: mobile app, IT investment, abnormal returns, firm value, business value of IT, event study

Suggested Citation

Yuan, Ziqing and Chen, Hailiang and Sia, Choon Ling, Stock Market Valuation of IT Implementations: An Empirical Study of Mobile App Investments (January 2023). Available at SSRN: https://ssrn.com/abstract=3336471 or http://dx.doi.org/10.2139/ssrn.3336471

Ziqing Yuan

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Hailiang Chen (Contact Author)

HKU Business School, The University of Hong Kong ( email )

Hong Kong
China

HOME PAGE: http://https://www.hkubs.hku.hk/people/hailiang-chen

Choon Ling Sia

City University of Hong Kong ( email )

Kowloon Tong
Hong Kong

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