Record Detail Back
Stock Market Reaction to Information Technology Outsourcing
- Share to:
Despite the abundant anecdotal evidence on the benefits of information
technology (IT) outsourcing, whether the stock market reacts favorably to such a
governance choice remains a puzzle. In line with the recent emphasis on a value-
based approach to evaluating firms, we adopt an event-study method to examine
the market-impacting effects of IT outsourcing. Our analysis, based on a sample
of 58 IT outsourcing announcements obtained from a systematic search of online
databases, indicates that this governance decision contributes positively and
significantlyto stock returns. The finding is robust across both service and
industrial sectors. Further, we demonstrate that the stock market reacts favorably
to IT outsourcing decisions by firms with a high business cost structure and low
business performance. We discuss the results pertaining to stock market reaction
in the context of corporate performance assessment and offer avenues for
research extensions.
Lawrence Loh and N. Venkatraman - Personal Name
1000136620
NONE
Management
English
2013
1-60
LOADING LIST...
LOADING LIST...