Abstract
In this study, we investigate how information technology (IT) investment affects firms' value in China. Theoretical arguments suggest that IT investments may positively affect firm value. However, prior research has been unable to document this theoretical prediction. We perform our analysis using data obtained from disclosures of IT investments of the firms in China from 1999 to 2001. Contrary to the previous researchers using event study methodology, we have validated the positive relation between the IT investment announcement and the stock price of the firm. Therefore, this study provides optimism on that IT investment may bring significant future benefits to firms. We have also tried cross section analysis and found that manufacturing firms have positive abnormal return while non-manufacturing firms have no significant positive return to IT investment announcement. Other factors such as the size of the firms, the type of the firms, and the content of the information are analyzed to see the market reaction of the firms.
Recommended Citation
Meng, Zhaoli and Lee, Sang Yong Tom, "The Impact of IT Investment Announcements on the Market Value of Firms in China" (2002). PACIS 2002 Proceedings. 24.
https://aisel.aisnet.org/pacis2002/24