Kevin E. Dow

The Impact of Information Technology Investments on Downside Risk of the Firm: Alternative Measurement of the Business Value of IT

We examine the effect that investments in information technology (IT) have on downside risk profiles of companies that made public announcements of their investments in technology. Given the limitations of financial and decision theory perspectives on risk, we adopt the strategic management perspective that stresses downside risk as an important alternative measure of firm performance. We examine whether different types of IT investments have a differential impact on firm downside risk. Drawing on the resource-based view of the firm and the real options perspective, we find evidence that IT investments and their timing influence organizational downside risk. Transformational and informational IT investments lead to a reduction in downside risk only if they lead to strategic IT investments in the industry. For competitive necessities such as IT investments that automate business functions, a reduction in downside risk is realized by investing in parity with industry participants. Our study contributes to the literature by offering an alternative perspective on the benefits of IT investments, particularly where no apparent incremental financial results may be evident. It also generates insights on IT investment strategies that may help firms keep up with or stay ahead of the competition.

Data architectures for an organizational memory information system

A framework is developed that supports the theoretical design of an organizational memory information system (OMIS). The framework provides guidance for managing the processing capabilities of an organization by matching knowledge location, flexibility, and processing requirements with data architecture. This framework is tested using three different sets of data attributes and data architectures from 147 business professionals that have experience in IS development. We find that trade‐offs exist between the amount of knowledge embedded in the data architecture and the flexibility of data architectures. This trade‐off is contingent on the characteristics of the set of tasks that the data architecture is being designed to support. Further, the match is important to consider in the design of OMIS database architecture.

The Effects of Investments in Information Technology on Firm Performance: An Investor Perspective

Analyzing the beneficial effects of investments in information technology IT is an area of research that interests investors and academics. A number of studies have examined whether investments in IT have a positive effect on some measure of earnings or other form of financial return. Results from these studies have been mixed. This paper extends the literature by adopting an investors perspective on firm performance when IT investments are made, using the preservation of capital as a performance measure. The authors examine companies that made public announcements of their investments in technology to see if they were able to mitigate losses to investors by reducing their downside risk to investors. This study further discusses whether different types of IT investments have different impacts on firm risk from an investors viewpoint. Findings suggest that IT investments impact a firms downside risk, and the authors offer an alternative perspective on the benefits of IT investments, particularly where no positive incremental financial results are evident.

Changing Attitudes Toward Women IT Managers

Essentialism and social constructionism theories have long explained the difficulties women experience as they aspire to higher managerial positions or enter science and technology fields. In the 1970s, the Women as Managers Scale WAMS sought to determine the extent to which males perceived females as being different from their social group. Given efforts to encourage women to consider IT careers and changes in public law and education that have occurred since the early 1970s, this study revisited the WAMS to compare current attitudes of young people toward women as managers. The results suggest that through the intangible individual differences of women, perspective, overtime, via training, by awareness, and with their greater participation in the workplace, there has been gradual improvement in the perception of women as managers by men in the science and technology fields.

The Influence of Training Environment on Trainee Expertise

Competent computing skills are critical for successful business operations and the accountants who sustain them. Developing competent skills requires not only knowledgeable trainers but also facilities able to support and deliver instruction to accounting trainees in efficient ways. Technology-equipped training environments have long been espoused as essential environments needed to speed delivery and enhance the learning experience of trainees. This study examined the impact of training environment on knowledge and skill set development. Results suggest that there are limitations to the extent to which technology-equipped training environments influence learning.

Daytona Dreams Restaurant: Linking Accounting Systems with Business Valuation

ABSTRACT: A problem encountered in accounting information systems (AIS) education is that students sometimes do not understand how organizational risks affect firm value. This case presents a privately held restaurant that is currently under acquisition consideration by a publicly traded restaurant group that follows internal control guidance as stipulated by the Committee of Sponsoring Organizations (COSO) guidelines. The objective of this case is to present students with a causal link among (1) internal control weaknesses of a restaurant, (2) financial statement assertions, and (3) management decisions that can impact firm value. Students must identify and translate control weaknesses into the cases business valuation decision. The case is appropriate for undergraduate and graduate AIS and audit classes.

Double learning or double blinding: an investigation of vendor private information acquisition and consumer learning via online reviews

In this paper, building upon information acquisition theory and using portfolio methods and system equations, we made an empirical investigation into how online vendors and consumers are learning from each other, and how online reviews, prices, and sales interact among each other. First, this study shows that vendors acquire information from both private and public channels to learn the quality of their products to make price adjustment. Second, for the more popular products and newly released products, vendors are more motivated to acquire private information that is more precise than the average precision to adjust their price. Third, we document a full demand-mediation model between rating and price. In other words, there is no direct linkage between price and rating, and the impact of rating on price (the vendor learning) as well as the impact of price on rating (the consumer learning) are all through demand. Our results show that there is no fundamental difference between the pricing decisions with and without the consumer generated contents. The price is still driven by the supply and demand relationship and vendors only adjust their price in response to review change when those reviews impact sales. We proposed either the impact of reviews has been incorporated into sales or reviews are less truth worthy due to potential review manipulation. Given the complicate situation, we call for further study to unveil this double learning process with double blinding results.

Riding the waves of technology through the decades: The relation between industry-level information technology intensity and the cost of equity capital

This paper examines the effect that information technology (IT) investments have on the industry cost of equity capital. We find that industry IT intensity, defined as the relative amount of IT investment to total fixed asset expenditures, is negatively related to the industry cost of equity capital. These results indicate that industries with higher levels of IT investment have lower cost of equity capital. We also find that the relation between IT intensity and cost of equity capital changes over time. Initially, investors viewed IT investments as risky ventures and demanded higher levels of cost of equity (or higher return on their investment) for those industries investing in IT. However, beginning in the 1980s, as IT became more reliable, more cost effective, and had the ability to transform businesses, investors viewed IT Intensity as a positive business strategy with less associated risks and reduced their required cost of equity capital (or lower return on their investment). Extrapolating from our industry results, IT investments allow firms to potentially raise capital at a lower price so they have more assets to employ, indicating that IT investments can be a key factor for business success.

How Experience and Expertise Affect the Use of a Complex Technology

As end-users work with increasingly complex technologies, it is important that these technologies be used to the fullest extent possible. Time is needed to learn how to use these new technologies and fit them to user tasks, but the fact that a user has gained experience does not mean that expertise has also been gained. Using survey data collected from 187 data warehouse end-users, we found that experience and expertise have a significant positive correlation (r = 0.35, p < 0.001), but expertise has a significantly greater effect on ease-of-use perceptions (t=10.2, p < 0.0001) and the use of a technology (t=21.08, p < 0.0001) than experience. Therefore, it is critical that researchers properly delineate which construct – end-user expertise or experience – is being assessed, when measuring the effect that individual differences have on the perceptions and use of technology.