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Journal Article

Stock Price Reaction to Investments in Information Technology: the Relevance of Cost Management Systems  pp27-30

Narcyz Roztocki, Heinz Roland Weistroffer

© Apr 2006 Volume 9 Issue 1, Editor: Dan Remenyi, pp1 - 43

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Abstract

The identification of conditions and factors under which investments in Information Technology (IT) can be expected to yield tangible returns is the subject of many productivity studies. Event study methodology, which examines the reaction in the stock price to announcements of different types of IT investments, is one approach to this kind of research. In the research presented in this paper, we use event study methodology to investigate the effect of cost management systems on payoffs from IT investments. The motivation for our research is based on the assumption that companies possessing reliable cost management systems, such as Activity‑Based Costing (ABC), are less likely to make expensive mistakes when investing in IT. Furthermore, the companies that use ABC and thus know the costs of their operation, are better able to single out those IT projects which positively impact the bottom line and competitiveness. In our study, we use a sample of three companies that are adopters of ABC, to examine the impact of 81 IT investment announcements on stock prices.

 

Keywords: Activity-based costing, cost management systems, event study methodology, information technology productivity paradox

 

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Journal Issue

Volume 9 Issue 2 / Nov 2006  pp45‑104

Editor: Dan Remenyi

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Editorial

Once again we have received an interesting range of research papers from authors around the world and furthermore they continue to represent a very wide range of thought with regards to the different applications of evaluation thinking for information and communication technology. It is clear that this field has not yet produced a clear consensus as to any particular methodology and I for one believe that this is what one might loosely call a “good thing”.

Six papers have been selected by our reviewers through the process or double‑blind peer review and this has produced six very interesting and yet different papers from authors in Sweden, Spain, The Netherlands, Ireland and Greece.

I trust readers will find these pieces of research as interesting as I have.

 

Keywords: IS integration, activity-based costing, assessment, business evaluation, cost management systems, e-business, e-commerce, enterprise modelling, evaluation framework, event study methodology, information systems effectiveness, information systems management, information systems quality, information technology productivity paradox, internet business, IS success, IT investment, process capability, project portfolio, risk management, software process maturity, system analysis metrics, value-at-risk, web-facilitated business

 

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