The impact of enterprise application integration on stock prices
Journal of Enterprise Information Management
ISSN: 1741-0398
Article publication date: 16 October 2009
Abstract
Purpose
Enterprise application integration (EAI) technologies are critical to functionally integrate diverse corporate computer systems, and as such may be expected to have a positive effect on business value. The purpose of this paper is to examine the market reaction to announcements of EAI investments as a surrogate for investor perceived business value of such technology.
Design/methodology/approach
An event study approach is used with 81 announcements of EAI investments between 1998 and 2005, taken from Lexis‐Nexis database.
Findings
The results suggest that investors do not always receive EAI investments positively, especially if the announcements are from financially distressed companies and if market conditions are unfavorable.
Research limitations/implications
Limitations include the possibility of confounding events, possible bias in the identified announcements, and our focus on EAI technology only. Future research may try to better account for confounding events, identify a more comprehensive list of relevant announcements, and also look at other technologies.
Practical implications
Managers should not view EAI technology as a panacea for organizational problems. Financial markets mostly respond negatively to EAI announcements when the announcing company is perceived as an investment risk or the announcement is released during bear market conditions.
Originality/value
This study expands the existing body of knowledge on IT contribution to market value. The focus on EAI technology allows for better comparison of results and testing of hypotheses. Also new is the finding that perceived company risk as well as market conditions play an important role in the reaction to IT investment announcements.
Keywords
Citation
Roztocki, N. and Weistroffer, H.R. (2009), "The impact of enterprise application integration on stock prices", Journal of Enterprise Information Management, Vol. 22 No. 6, pp. 709-721. https://doi.org/10.1108/17410390910999594
Publisher
:Emerald Group Publishing Limited
Copyright © 2009, Emerald Group Publishing Limited