The impact of ICT‐enabled offshoring announcements on share prices

Daniel, Elizabeth; Kodwani, Devendra; Datta, Sanjukta

doi:10.1108/17410390910949706

Cited by 7 publications

(6 citation statements)

References 29 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…According to economic logic, management decisions to outsource business services reflect the desire to increase firm value (Daniel et al , 2009). Yet, assessing the impact of managerial decisions such as business service outsourcing on firm value is a challenge (Raassens et al , 2014).…”

Section: Methodology and Measuresmentioning

confidence: 99%

“…In addition, most studies investigate geographic and intercultural aspects. Lee and Kim (2010) and Jiang et al (2007) agree that offshoring has a more positive impact than onshore outsourcing, but Daniel et al (2009) caution that investors do not reward offshore outsourcing of ICT services. According to Raassens et al (2012), the impact of outsourcing NPD is contingent on technological and cultural uncertainty, and Kalaignanam et al (2013) similarly demonstrate that a service provider’s economic and cultural distance can influence stock returns.…”

Section: Literature Overviewmentioning

confidence: 99%

“…Against this backdrop, the following study focuses on the differential effects of external and internal business service outsourcing. The dependent variable of the study is manufacturers’ firm value, as economic logic suggests that a firm’s decision to undertake outsourcing reflects its desire to increase its firm value (Daniel et al , 2009).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Business service outsourcing in manufacturing firms: an event study

Eggert

Böhm

Cramer

2017

JOSM

View full text Add to dashboard Cite

Purpose Many manufacturing firms entrust partners to provide services on their behalf. However, it is not clear whether and when firms can capture the potential value advantages of outsourcing business services. The purpose of this paper is to investigate the effects of different types of business service outsourcing on firm value. Design/methodology/approach The paper uses event study methodology to estimate the impact of business service outsourcing announcements on abnormal returns of publicly traded manufacturing companies in Europe. Findings External service outsourcing that directly affects the company’s customers leads to more favorable outcomes than internal service outsourcing. This effect is contingent on the strategic outsourcing intention, the service’s reliance on technology, and the choice of the outsourcing partner. Research limitations/implications Findings show that firm value depends critically on the service value it delivers to customers. Future research could explore further contingency variables, and investigate the role of service outsourcing networks and relationships. Practical implications The insights of this study help managers to decide why, how, and to whom they should outsource their business services, as well as how to justify their outsourcing decisions, and how to communicate them toward the financial markets. Originality/value This research sheds light on the value implications of outsourcing decisions. Two types of business service outsourcing are distinguished, namely, internal and external. Furthermore, the study enhances our understanding of a contingency perspective on service outsourcing decisions.

show abstract

Section: Methodology and Measuresmentioning

confidence: 99%

Section: Literature Overviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Business service outsourcing in manufacturing firms: an event study

Eggert

Böhm

Cramer

2017

JOSM

View full text Add to dashboard Cite

show abstract

“…Chatterjee et al (2001) examined the wealth effects of newly created CIO announcements. Agrawal et al (2006) and Hayes et al (2000) studied the market impact of outsourcing decisions and Daniel et al (2009) looked at offshoring. The impact of e-commerce-related decisions was examined by Subramani and Walden (2001) and Dewan and Ren (2007).…”

Section: It Control Weaknesses and Market Valuementioning

confidence: 99%

“…There is a significant body of research utilizing event study methodology to examine the market reaction to announcements or reports of a variety of IT investments ( Jory et al, 2010;Daniel et al, 2009;Roztocki and Weistroffer, 2009;Tanriverdi and Ruefli, 2004;Dehning et al, 2003;Im et al, 2001;Hayes et al, 2000;Dos Santos et al, 1993), negative outcomes related to IT control failures (Benaroch, et al, 2012;Acquisti et al, 2006;Covusoglu et al, 2004), and internal control weaknesses in general (without distinguishing between IT-related and non-ITCW) (Ittonen, 2010;Ashbaugh-Skaife et al, 2009;Hammersley et al, 2008;Ashbaugh-Skaife et al, 2007;Ogneva et al, 2007). What is missing in the literature is a study of the value of IT-related internal controls as perceived by the capital markets.…”

Section: Introductionmentioning

confidence: 99%

IT internal control weaknesses and the market value of firms

Kuhn¹,

Morris

2017

JEIM

View full text Add to dashboard Cite

Purpose With computer technology fast becoming the engine that drives productivity, IT systems have become more pervasive in the daily operations of many businesses. Large, as well as small, businesses in the USA now rely heavily on IT systems to function effectively and efficiently. However, past studies have shown CEOs do not always understand how reliant their business is on IT systems. To the authors’ knowledge, no research has not yet examined if financial markets understand how IT affects the performance of businesses. The paper aims to discuss these issues. Design/methodology/approach In this study, the authors utilize the event study method to examine how financial markets interpret weaknesses in businesses IT systems. The authors examine this in the context of the Sarbanes-Oxley Act – Section 404 requirements and utilize the internal reporting requirement in the annual financial statement filing with the Securities Exchange Commission as a proxy to evaluate how the financial markets interpret IT weaknesses. Findings Using an event study, the authors show that the market does not necessarily understand and respond to the effects of IT weaknesses on overall financial performance of firms and thus challenge the efficient market hypothesis theory. Originality/value A second contribution is methodological in nature. IS researchers thus far have been using limited market benchmarks, statistical tests, and event windows in their respective event studies of market performance. This study shows shortcomings of that approach and the necessity of expanding usage of available event analysis tools. The authors show that using more than one market benchmark and statistical test across multiple time frames uncovers the effects that using a single benchmark and test over a single window would have overlooked.

show abstract

Event study methodologies in information systems research

Konchitchki

O’Leary

2011

International Journal of Accounting Information Systems

147

View full text Add to dashboard Cite

Event studies are based on the theoretical framework of efficient capital markets and the notion that security prices include all information available to the market. As a result, announcements made by firms provide to market participants information that can be impounded into the market price. This paper investigates the use of event studies in information systems and accounting information systems research using a three-pronged approach. First, this paper provides a comprehensive survey of research that uses event study methodologies, where the events are announcements made by firms about issues related to information systems, e.g., announcements of the adoption of enterprise resource planning systems and of the effect of security breaches in firms' information systems. Second, this paper summarizes event study methodologies used in prior research, along with some of the key parameters and concerns associated with their implementation. Third, this paper provides remarks on key event study modeling issues, and it offers recommendations to researchers.

show abstract

The impact of ICT‐enabled offshoring announcements on share prices

Abstract: For guidance on citations see FAQs.

Cited by 7 publications

References 29 publications

Business service outsourcing in manufacturing firms: an event study

Business service outsourcing in manufacturing firms: an event study

IT internal control weaknesses and the market value of firms

Event study methodologies in information systems research

Contact Info

Product

Resources

About