Asset stock accumulation and sustainability of competitive advantage
Management Science
Information Technology Effects on Firm Performance As Measured by Tobin's Q
Management Science
The intangible benefits and costs of investments: evidence from financial markets
ICIS '97 Proceedings of the eighteenth international conference on Information systems
Organizational knowledge resources
Decision Support Systems - Knowledge management support of decision making
Information Systems Research
Value Implications of Investments in Information Technology
Management Science
The Timing of Resource Development and Sustainable Competitive Advantage
Management Science
Does information technology provide banks with profit?
Information and Management
Measuring firm performance using financial ratios: A decision tree approach
Expert Systems with Applications: An International Journal
The impact of multinationality on firm value: A comparative analysis of machine learning techniques
Decision Support Systems
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How much IT capital contributes to the economic value of firms is a relevant but complex issue, since the contribution may come from different sources that are difficult to separate. In this paper, we model the determinants of the economic value of multi-asset firms with market power when the adjustment costs of investing in IT capital turn into organization capital, increasing the future cash flow of the firm. The resulting valuation equation, new in the literature, has four simultaneous sources of economic value: (i) purchase costs of the assets, (ii) adjustment costs, (iii) organization capital, and (iv) rents from market power. The model is tested with a unique data base from Spanish banks in a time period when these banks invested heavily in IT capital. We find that 54% of the economic value of the representative bank corresponds to the purchase cost of material and immaterial assets, including IT capital. The remaining 46% corresponds to the contributions of: adjustment costs (17%), organization capital (7%) and rents from market power (22%).