Vernon J. Richardson

The value relevance of announcements of transformational information technology investments

In this paper, we examine the influence of IT strategic role to extend the findings of Im et al. (2001), Chatterjee et al. (2002) and Dos Santos et al. (1993). Specifically, we demonstrate that IT strategic role can explain how IT investments in each of the IT strategic roles might affect the firms competitive position and ultimately firm value. We find positive, abnormal returns to announcements of IT investments by firms making transformative IT investments, and with membership in industries with transform IT strategic roles. The results of previous research are not found to be significant when IT strategic role is included as an explanatory variable. These results provide support for the value of capturing the IT strategic role of a firms IT-related competitive maneuvering in studies striving to understand the conditions under which IT investments are likely to produce out-of-the-ordinary, positive returns.

Dissemination of information for investors at corporate Web sites

Abstract We extend the limited prior research on Internet financial reporting by providing insights into dissemination of two types of financial information at corporate Web sites. One type consists of reports that already have been filed with the SEC (i.e. required filings). The second type is all other (voluntary) information for investors. In doing so we investigate whether Web-based dissemination of both types of data can be explained by theories of incentives to voluntarily disclose information via more traditional means such as meetings or conference calls with analysts. We use regression analysis to test hypotheses that link the variation in the information disseminated through corporate Web sites to factors thought to influence voluntary disclosure of financial information. Presence of required items is significantly associated only with size and a proxy for information asymmetry, while voluntary information item disclosure is associated with variables proxying for size, information asymmetry, demand for external capital, and companies’ traditional disclosure reputations. Our results confirm that incentives motivating initial voluntary disclosure also explain the subsequent dissemination of voluntary material.

The presentation of financial information at corporate Web sites

Abstract The advent of the World Wide Web has provided a new avenue for companies to communicate with current and potential investors. Our study investigates corporate Web site financial disclosure practices. We evaluate and compare the Web site disclosure levels of 17 industries, and summarize the frequencies with which a variety of financial disclosure items are found. Our examination identifies several practices that raise potential concerns for the accounting profession. In particular, we investigate annual report excerpts tailored for Internet users and identify information found at Web sites that may increase disclosure risk. We also discuss issues associated with locating and using Web site data.

Information technology investments and firm value

Our objective in this paper is to develop a firm value model to assist IT managers and researchers in understanding the multiple effects that IT investments have on firm value. This firm value approach adds to the process-oriented approach through simultaneous evaluation of all of the factors that affect firm value. It is crucial for IT professionals to recognize the complex and diverse implications of IT investments on firm value. The implications of the firm value approach include forcing IT managers to think in terms of both industry and company-specific effects of IT investments, to consider both the magnitude and duration of competitive advantage due to IT investments, and the implications of the effect that IT investments have on risk and its relation to firm value. We demonstrate an application of the firm value framework by evaluating a major stream of research in MIS--event studies of IT investment announcements. Appendices to this paper can be found at http://www.itandfirmvalue.com.

Valuation effects of patent quality: A comparison for Japanese and U.S. firms

Abstract For both Japanese and U.S. firms, measures of patent quality based upon the number of scientific citations have robust market-value influences. These results suggest that investors regard scientific measures of the quality of inventive output as useful indicators of the economic value tied to patenting activity. The possibility of country-specific influences on the effectiveness of patenting activity is also suggested. These findings are of practical relevance because they suggest that scientific measures of patent quality have the potential to offer managers useful guidance concerning the quantity and quality of inventive output and the effectiveness of patent investments.

Information content of accounting goodwill numbers

Abstract Information effects narrowly tied to goodwill write-off announcements are typically negative and material, on the order of 2–3% of the company’s stock price. In the one-year pre-announcement period, negative information effects on the order of −40% are also noted. Post-announcement period information effects of roughly −11% suggest that much, but perhaps not all, of the negative information (valuation) effects tied to goodwill write-off announcements are realized by the end of the announcement period. Negative stock-price effects tied to goodwill write-off decisions indicate that accounting goodwill numbers capture a significant aspect of the intangible dimension of firm value, and suggest that accounting theory and practice is adept at identifying when such intangible assets are impaired.

The Business Value of IT: A Synthesis and Framework of Archival Research

ABSTRACT: This paper synthesizes recent empirical archival research investigating the link between information technology investment and business value. It examines (1) financial and nonfinancial measures to represent different elements of business value, (2) IT investment measures and links with firm performance, (3) IT and business complementarities that affect firm performance, and (4) the impact of business context and IT alignment with business strategy on resulting performance. The review of prior research is guided by a balanced scorecard framework that places IT in a business context and highlights the role of potential drivers and contextual factors that impact the association between IT and firm value. The paper concludes by proposing several broad avenues of future research that may be of particular interest to archival accounting information systems researchers.

The consequences of information technology control weaknesses on management information systems: the case of Sarbanes-Oxley internal control reports

In this article, the association between the strength of information technology controls over management information systems and the subsequent forecasting ability of the information produced by those systems is investigated. The Sarbanes-Oxley Act of 2002 highlights the importance of information system controls by requiring management and auditors to report on the effectiveness of internal controls over the financial reporting component of the firms management information systems. We hypothesize and find evidence that management forecasts are less accurate for firms with information technology material weaknesses in their financial reporting system than the forecasts for firms that do not have information technology material weaknesses. In addition, we examine three dimensions of information technology material weaknesses: data processing integrity, system access and security, and system structure and usage. We find that the association with forecast accuracy appears to be strongest for IT control weaknesses most directly related to data processing integrity. Our results support the contention that information technology controls, as a part of the management information system, affect the quality of the information produced by the system. We discuss the complementary nature of our findings to the information and systems quality literature.

ASSESSING LEADING INSTITUTIONS, FACULTY, AND ARTICLES IN PREMIER INFORMATION SYSTEMS RESEARCH JOURNALS

This study provides a current assessment of the impact of various Information Systems (IS) articles, and the productivity of IS researchers and institutions. Using a data set of Information Systems articles that spans 15 years, we conducted a scientometric study of the field. The articles are drawn from three premier IS journals. We use citation analysis to demonstrate the impact of articles on institutions and individuals in the IS field. In addition, we identify IS topics with the highest impact. The results indicate that leading productive institutions have changed over time, and problematically, institutions outside of North America are poorly represented. We compare our results with earlier productivity findings created using alternative metrics.

Reexamining the Value Relevance of E-Commerce Initiatives

This study reexamines the value relevance of e-commerce announcements using an event study methodology. Event studies have become an increasingly popular technique for information systems research by giving researchers a tool to measure the notoriously elusive value of information technology. We find evidence that the traditional event study methodology may not provide an accurate measure of abnormal returns during periods of high market volatility, and propose an alternative methodology. The alternative methodology does not use an estimation period, and takes into account extreme or unusual market movements in the period in which the e-commerce announcement was made. Using the alternative methodology, we find evidence of positive abnormal returns for e-commerce announcements made in the fourth quarter of 1998, but no abnormal returns to e-commerce announcements made in the fourth quarter of 2000. We also find significant differences in value depending on the type of e-commerce initiative. In 2000, e-commerce initiatives with a digital product were valued significantly more than e-commerce initiatives with a tangible product, while in 1998 no such difference existed. In 1998, business-to-business e-commerce initiatives, e-commerce initiatives with a tangible product, and e-commerce initiatives by pure-play Internet firms were valued more than similar initiatives in 2000. The study makes a significant contribution for understanding the value of e-commerce initiatives in highly volatile markets and demonstrates how market values of e-commerce changed from 1998 to 2000. Furthermore, this study shows the importance of carefully considering both the time frame examined and the methodology used when assessing the value relevance of e-commerce initiatives as to avoid inflating the magnitude of any observed effects.