Do firms adopting cloud computing technology exhibit higher future performance? A textual analysis approach

Min Zheng, Rong Huang, Xintong Wang and Xiaorong Li

International Review of Financial Analysis, 2023, vol. 90, issue C

Abstract: In this paper, we examine whether firms adopting cloud computing technology exhibit higher future accounting performance. Using text-based measures of cloud computing and corporate strategies obtained from 10-K filings, we find that firms adopting cloud computing technology experience higher accounting returns in the next year, suggesting a short-term effect. We further document that cloud computing adopters emphasizing a differentiation strategy achieve an increase in profit margin, while their cost leader counterparts obtain an improvement in asset turnover. Additional analyses show that our results are robust to alternative measures of cloud computing adoption and corporate strategies. Overall, our study suggests that strategic positioning affects the future accounting performance of cloud computing adopters.

Keywords: Cloud computing; Business strategy; Differentiation; Cost leadership; Earnings (search for similar items in EconPapers)
JEL-codes: M15 M41 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:90:y:2023:i:c:s1057521923003824

DOI: 10.1016/j.irfa.2023.102866

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