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The Value Relevance of IT Investments on Firm Value in the Financial Services Sector

Author

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  • Ram S. Sriram

    (Georgia State University, USA)

  • Gopal V. Krishnan

    (City University of Hong Kong, China)

Abstract

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.

Suggested Citation

  • Ram S. Sriram & Gopal V. Krishnan, 2003. "The Value Relevance of IT Investments on Firm Value in the Financial Services Sector," Information Resources Management Journal (IRMJ), IGI Global, vol. 16(1), pages 46-61, January.
    • Handle: RePEc:igg:rmj000:v:16:y:2003:i:1:p:46-61
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    Cited by:

    1. Jeevarathnam P Govender, 2013. "The Adoption of Internet Banking in a Developing Economy," Journal of Economics and Behavioral Studies, AMH International, vol. 5(8), pages 496-504.

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