Risk and return of IT investment: evidence from SCM and CRM announcements

Yangfan Li and Jinghua Huang

International Journal of Networking and Virtual Organisations, 2012, vol. 11, issue 3/4, 290-304

Abstract: Measuring the effect of investment announcements on a firm's stock performance has become an important method in research on IT/IS business value, especially in the discussion of the consequent changes in corporate risk-return relationship. This paper selects the announcements made by US listed companies that implemented supply chain management (SCM) and customer relationship management (CRM) from 2000 to 2008. By testing the stock performance with event study method, and comparing the differences between sample and control groups, we find that; 1) during the event window, SCM and CRM announcements can bring some degree of risk-adjusted abnormal return, but the return effect is unstable across the years observed; 2) in the long run, there is no abnormal return from SCM and CRM investments; 3) in the long term, SCM and CRM investments do not increase the systematic and unsystematic risk of the companies; 4) some moderating factors may affect the risk and return of SCM and CRM announcements. Our results enrich research on the effect of IT investments on company performance, and contribute to the stream of event studies in IT business value.

Keywords: supply chain management; SCM; IT risk and return; customer relationship management; CRM; event study method; stock price volatilities; abnormal returns; investment announcements; information technology; information systems; stock performance; business value; risk adjustment; IT investment; company performance; firm performance; stock markets. (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=48911 (text/html)
Access to full text is restricted to subscribers.

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:ids:ijnvor:v:11:y:2012:i:3/4:p:290-304

Access Statistics for this article

More articles in International Journal of Networking and Virtual Organisations from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().