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The Information Content of Just‐in‐Time Inventory System Adoption Announcement
Author(s) -
Howton Shawn D.,
Higgins Eric James,
Biggart Timothy B.
Publication year - 2000
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00331
Subject(s) - earnings , business , capital market , cash flow , stock (firearms) , cash , stock exchange , capital expenditure , monetary economics , accounting , economics , finance , mechanical engineering , engineering
This paper examines the stock market reaction and analysts’ earnings forecast revisions associated with just‐in‐time (JIT) inventory system adoption announcements. The stock market reaction is positive, however, analysts do not revise their earnings forecasts when firms announce a JIT adoption. The results of the paper show mixed support for the hypothesis that JIT is viewed by markets as a costly capital expenditure intended to increase the net cash flows of the firm and mixed support for the hypothesis that JIT is viewed by markets only as an accounting change.