The Market Value Impact of IT Investments : An investigation into the impact IT investment announcements have on the market value of firms between 1996 and 2006

ISBN-13: 9783639139624 / Angielski / Miękka / 2009 / 60 str.

Fouad Nagm

Opis

This study applies the event study method, a methodto measure how a firm s stock price reacts to newinformation, to a list of publicly traded Australianfirms. 217 announcements were selected relating to ITinvestments over a period from 1996 to 2006. Positiveabnormal returns are observed on the announcement dayof each of three distinct time periods; during thetechnology bubble (1996 to 1999), during the Year2000 bug (Y2K bug) period (2000 - 2001), as well asthe period afterwards that ensued to 2006. These areall statistically significant. Similar results werealso found when categorizing announcing firms intotwo broad industry groups; IT firms and non-IT firms.Each announcement was value-weighed based on firmsize and find that the market s assessment of thereturns to IT investments is more favourable towardssmaller firms than larger firms for the whole sample,across all periods and the two industry groups. Theseresults are of practical relevance for the particularAustralian market under investigation given thecomparatively high levels of spending on IT inAustralia in relation to other OECD countries.

O autorze

Dr Fouad Nagm has several years of industry experience in various
analytical and project roles at E&Y, BT Financial Group and
National Australia Bank. He has taught a number of
under/postgraduate subjects including Research Methods,
Business IS, IS Management, Organisational
Finance, IS Project/Knowledge Management.
Email: fouad@unsw.edu.au