Abstract

Using firms' expenditures for telecom services as proxies for operational IT investment, this paper investigates how the expenditures on Internet data center, Internet of Things, and cloud computing affect the performance of 1028 listed companies in China. Results show that higher IT investment enhances firm performance in one to four months for certain technology-industry pairs. Furthermore, firm size and early IT investment have positive moderating effects on the relationship between IT investment and corporate performance. The results also reveal that the investment effect differs at various levels of analysis (i.e., firm, industry, and market level). Our results suggest that for certain technology-industry pairs, IT investment serves as a high-frequency signal of firm operational performance that affects firms' financial performance in the stock market.

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