Information Technology and Financial Performance: The Impact of being an Internet-Dependent Firm on Stock Returns

Authors:
Aurore J. Kamssu;Brian J. Reithel;Jennifer L. Ziegelmayer
Affiliations:
Business Information Systems, Tennessee State University, 330 10th Avenue, North Nashville, TN 37209, USA. akamssu@tnstate.edu;Area of MIS/POM, 240 Holman, The University of Mississippi, University, MS 38677, USA. reithel@bus.olemiss.edu;Management Information Systems, 326 Holman, The University of Mississippi, University, MS 38677, USA. jziegelmayer@bus.olemiss.edu
Venue:
Information Systems Frontiers
Year:
2003

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Abstract

The choice of a particular technology to implement a firm's business strategy may impact the firm's market performance. This study assesses the impact of being an Internet-dependent firm on a firm's stock valuation. The empirical results indicate that in a booming economy, Internet-dependent firms have lower excess returns than non-Internet firms. These high returns can be explained by the fact that in such an economy, Internet stocks trade at relatively higher prices than non-Internet stocks. Therefore, choosing a particular technology to implement business strategy may have a significant impact a firm's stock performance.