The Value Relevance of IT Investments on Firm Value in the Financial Services Sector

Ram S. Sriram and Gopal V. Krishnan
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Ram S. Sriram: Georgia State University, USA
Gopal V. Krishnan: City University of Hong Kong, China

Information Resources Management Journal (IRMJ), 2003, vol. 16, issue 1, 46-61

Abstract: Understanding and assessing the payoff from investments in IT is an important exercise for managers. A number of researchers have examined the elusive notion of firm-level information system effectiveness and the results are mixed. This study contributes to this debate by examining the association between market value of equity and IT-related investments for a sample of firms in the financial services sector. It should be noted that companies in the financial services industry are intensive users of IT and often rely upon IT as a source of competitive advantage. We find a positive association between investments in IT and market value. Overall, our findings support the notion that investors perceive investments in IT as value-relevant.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:igg:rmj000:v:16:y:2003:i:1:p:46-61

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