Information technology, contextual factors and the volatility of firm performance

Kevin Kobelsky, Starling Hunter and Vernon J. Richardson

International Journal of Accounting Information Systems, 2008, vol. 9, issue 3, 154-174

Abstract: This study uses previous theory developed in the IT implementation literature and the information processing view of the firm to empirically investigate the impact of IT investments and several contextual variables on the volatility of future earnings. We use InformationWeek 500 data on IT spending from 1992–1997 to find evidence that IT investments increase the volatility of future earnings but that this impact is highly contingent upon three firm level contextual factors — sales growth, unrelated diversification, and size. These factors can lead to conditions in which IT increases or reduces earnings volatility. Taken together, these results may help explain what has recently been termed the “new productivity paradox,” i.e., the apparent under-investment in information technology despite evidence of highly positive returns for doing so, and suggests settings where managers may be under- or over-discounting returns on IT investments.

Keywords: SSRN: Journals-Management Research Network; MRN Information Systems & eBusiness Network; Computers & Information Technology; MRN Management Network; IO: Productivity, Innovation & Technology (search for similar items in EconPapers)
JEL-codes: C2 M19 M4 O30 O33 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1467089508000365
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ijoais:v:9:y:2008:i:3:p:154-174

DOI: 10.1016/j.accinf.2008.02.002

Access Statistics for this article

International Journal of Accounting Information Systems is currently edited by S.V. Grabski

More articles in International Journal of Accounting Information Systems from Elsevier
Bibliographic data for series maintained by Catherine Liu ().