THE PRICE SENSITIVITY OF BUSINESS SERVICE OUTSOURCING ANNOUNCEMENTS BY UK COMPANIES

Ahmad H. Juma'h () and Douglas Wood ()
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Ahmad H. Juma'h: Associate Professor of Accounting and Finance, Inter-American University, San Juan P. R., L M Rivera #54, Vega Alta, Puerto Rico 00692, USA
Douglas Wood: Emeritus Professor, Manchester Business School, Booth Street West, Manchester, MIS 6PB, UK

International Journal of Information Technology & Decision Making (IJITDM), 2003, vol. 02, issue 01, 161-180

Abstract: This article investigates the market reaction to a sample of announcements of business service outsourcing arrangements made by UK quoted companies between 1991 and 1997. Event study methodology is applied to daily stock returns to measure the reaction, in the form of excess returns, immediately prior to and at the date of an outsourcing contract announcement. The conclusion is that initial announcements tend to enjoy positive and significant reaction and that the larger companies in the sample show a more positive reaction than smaller companies. Overall outsourcing announcements appear to be associated with excess returns but the absence of any recognized basis for disclosure prevents a complete analysis of such events.

Keywords: Outsourcing; announcements; information technology; excess returns; event-study methodology (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0219622003000562

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