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Journal of the Association for Information Systems

Abstract

Using the natural resource-based view (NRBV) and signaling theory, we conducted an event study using the Fama-French four-factor (FFM4) model to determine how shareholders react to company announcements about adopting information technology (IT) to address environmental issues. We found that green IT announcements generate positive abnormal returns and increase share trading volume. Initiatives that use IT to support decision making (ITDSS) cause positive stock market reactions. Firms with good environmental performance records enjoy positive market returns from ITDSS and direct IT assets and infrastructure (ITASSETS) announcements. In contrast, shareholders react negatively to announcements regarding sustainable products and services (SPDTSVC). Combining the NRBV with signaling theory provides deeper theoretical insights than either theory alone. The findings could serve as the basis for further research and theory development on the different types of green IT and impacts on market value. The results help explain how firm characteristics and different types of green IT announcements impact market value, and they have significant implications for how firms plan and allocate their resources to support green initiatives.

DOI

10.17705/1jais.00466

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