The value relevance of IT investments on firm value in the financial services sector
Information Resources Management Journal; Jan-Mar 2003, Vol 16 Issue 1;  p46, 16p
Ram S Sriram, Gopal V Krishnan

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.

ISE Categories:  Competitive Advantage