Open AccessDoes Information Technology Spend Impact On Company Performance? Evidence From Accounting And Market-Based Measures
Author(s) -
Durrel Ramrathan,
Mabutho Sibanda
Publication year - 2015
Publication title -
the international business and economic research journal/the international business and economics research journal
Language(s) - English
Resource type - Journals
eISSN - 2157-9393
pISSN - 1535-0754
DOI - 10.19030/iber.v14i2.9116
Subject(s) - valuation (finance) , profit margin , business , accounting information system , market value , accounting , earnings , sample (material) , earnings per share , information technology , book value , profit (economics) , asset turnover , economics , finance , microeconomics , return on assets , stock exchange , chemistry , chromatography , political science , law
This study investigates the association between information technology spend and future company performance for a sample of companies where accounting and market value measures are used as proxies for performance. While the earnings measure indicated a strong positive relationship initiating early on, the profit margin and asset turnover measures provided some unexpected and mixed findings. However, Tobins q, a market valuation measure, indicated a strong positive relationship that supported the notion that investment in information technology can improve future company performance.