Information Technology Investments and Firm Value

Information and Management Archive, Vol. 42 , Issue 7, pp. 989 - 1008, October 2005

Posted: 25 Feb 2009

See all articles by Bruce Dehning

Bruce Dehning

Chapman University - The George L. Argyros School of Business & Economics

Theophanis C. Stratopoulos

University of Waterloo - School of Accounting and Finance

Vernon J. Richardson

University of Arkansas at Fayetteville

Date Written: November, 20 2008

Abstract

Our objective in this paper is to develop a firm value model to assist IT managers and researchers in understanding the multiple effects that IT investments have on firm value. This firm value approach adds to the process-oriented approach through simultaneous evaluation of all of the factors that affect firm value. It is crucial for IT professionals to recognize the complex and diverse implications of IT investments on firm value. The implications of the firm value approach include forcing IT managers to think in terms of both industry and company-specific effects of IT investments, to consider both the magnitude and duration of competitive advantage due to IT investments, and the implications of the effect that IT investments have on risk and its relation to firm value. We demonstrate an application of the firm value framework by evaluating a major stream of research in MIS--event studies of IT investment announcements.

Keywords: IT Investments, Firm Value

JEL Classification: M15, M41, O14

Suggested Citation

Dehning, Bruce and Stratopoulos, Theophanis C. and Richardson, Vernon J., Information Technology Investments and Firm Value (November, 20 2008). Information and Management Archive, Vol. 42 , Issue 7, pp. 989 - 1008, October 2005 . Available at SSRN: https://ssrn.com/abstract=1304925

Bruce Dehning (Contact Author)

Chapman University - The George L. Argyros School of Business & Economics ( email )

333 N. Glassell
Orange, CA 92866
United States

Theophanis C. Stratopoulos

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada
519-888-4567 x35943 (Phone)

Vernon J. Richardson

University of Arkansas at Fayetteville ( email )

401 WCOB
Fayetteville, AR 72701
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
516
PlumX Metrics