The Impact of Information Technology Spending on Future Performance

In this study, we investigate the association between information technology (IT) spending and future firm performance. Critics contend that greater expenditures on IT rarely lead to superior financial results, citing studies that compare firm performance to current IT spending. But valuation and stock-return studies have found a positive association between the market value of firms and their current IT spending or announcements of new IT initiatives. These observed relations are interpreted to mean that expected future earnings increased with new IT spending, consistent with a delayed impact of new IT on earnings. If actual future earnings increased with IT spending in a period, then a positive association between IT spending and future earnings should be directly observable. We describe a methodology for studying the association between IT spending in period t and earnings in future periods and evaluate this association for a sample of firms based on their IT spending during the ye...

• Type: Conference
• Year: 2003
• Where: ICIS
• Authors: Mark C. Anderson, Rajiv D. Banker, Nan Hu
• Keywords: Current It Spending, Future Earnings, ICIS 2003, Information Technology, Positive Association