Revisiting the Impact of ERP Systems on Business Value: A Triangulation Method

The present study will examine the impact of Enterprise Resource Planning (ERP) investment on business value. While there is considerable amount research on the impact of IT investments on business performance, few studies have provided empirical evidence about the business value of ERP investments. Case studies have shown positive impacts of ERP implementations. However, there are many cases where ERP systems have caused serious financial and operational problems. The present study attempts to provide evidence about the impact of ERP investments on business value by comparing the reaction of investors to ERP investment announcements with senior managers’ perceptions (ex ante) about the net benefits of the ERP system after its implementation (ex post), the proposed research in progress will shed some light on the conflicting results

Requirements on IT business value measures for mobile-integrated business processes

Investments in information technology (IT) do not always result in the expected tangible payoffs, and the factors which influence the effect of IT investments on organizational performance are not well understood. Stock market reaction is one approach to appraising IT investments. In this paper we propose a conceptual model describing the factors that impact IT investments based on market reaction findings of major event studies on IT implementation announcements. This preliminary model may serve as a starting point to better understand the complex issue of stock movements related to IT investments

The impact of supply chain applications annoucements on the market value of firms

We show that the announcement of SCM applications have a positive impact on the market value of firms using event study methodology. When SCM applications are disaggregated according to whether they are stand-alone SCM applications, or part of an enterprise system (SCM-ES) implementation, we find that the latter carry a significant value enhancement, while the former do not present a significant market reaction.SCM applications, Event study

Measuring The Impact Of Enterprise Resource Planning (ERP) Systems On Shareholder Value

ERP systems emerged in the 1990s as a tool to integrate business processes and improve productivity.  Prior studies have used surveys, field studies, and event studies to measure the impact of ERP systems finding mixed results.  Motivated by these mixed results this study extends this prior research by using capital markets research methods and models to measure the impact of ERP systems on shareholder value.  The study examines long-term buy-and-hold returns and share prices for a sample of 145 firms from 33 industry groups that implemented ERP systems from 1994 to 2003.  The results provide evidence that firms implementing ERP systems achieve abnormal returns for the first five years after implementation.  Price regression models support these results finding that share prices are positively associated with ERP implementation

A method to measure the accounting abnormal returns of largescale information technology investments: the case of enterprise systems

There is a considerable body of literature about the business value of information technology. Although there is empirical evidence about the positive impact of large-scale information technology on firm performance, the number and variety of quantitative methods used to measure this impact is considerable. Besides this diversity in the methods, almost none of them have both strong theoretical basis and strong econometric robustness. A method to measure accounting-based abnormal returns of large-scale information technology is proposed. Unlike existing accounting and market measures, this measure considers industry tendencies over time and the magnitude of the measure can be used as a proxy of the business value of the IT initiative. The method is implemented using a sample of enterprise systems implementations in public companies. This is a unique methodology based on recent accounting research, which propose an econometric model to capture annual abnormal returns of large-scale information technology initiatives. The method is validated with theoretical arguments and empirical results. Empirical results suggest that the measurement of the IT payoff is reliable, valid and robust

Enterprise Resource Planning Implementation and Accounting Information Quality

This study investigates the effect of ERP systemimplementation on accounting information quality of firms listedin Indonesian Stock Exchange. The accounting informationquality proxies are relevance and faithful representation.Relevance is measured with time lag between fiscal year-end andearnings announcements date, whereas faithful representation ismeasured with absolute discretionary accrual. The study findsthat the implementation of ERP system increase the absolutediscretionary accrual, thus the faithful representation of theaccounting information decreases. With respect to relevance,firms with incentive to increase the timeliness of earning releasedate experience a decrease in reporting lag after implementingERP system

Survivor Bias In Firm Specific Longitudinal Studies: The Case Of ERP Systems

Researchers in the field of accounting and finance often use event studies to measure the impact of various business decisions on the market value of stock.  They argue that market reaction to the event is predictive of the future effect on the company.  Sometimes researchers would like to follow up on these initial event studies to see if the market was correct in its predictions.  However, many times the original sample used for the event study does not survive intact into future time periods, which then raises the issue of survivor bias.  This paper examines one such event study in which the markets react favorably to announcements that ERP systems are being implemented.  However, only 55% of the firms in the original sample survive through 2009, making any follow-up study subject to the survivor bias argument.  The study examines the circumstances related to the non-survivors and, using proxies for the missing data, concludes that the results of a follow-up study would not have been impacted by survivor bias

Preannouncements: Forecast or Realized Earnings?

The literature has long recognized preannouncements as management forecasts issued after the fiscal period ends but before the actual earnings announcements. However, with the advent of Enterprise Resource Planning (ERP) systems, companies now can gather information promptly and process it efficiently, which allows companies to prepare earnings summaries in real-time, thus making it unnecessary to issue forecasts in the days following the quarter-end date. This study argues that any earnings announcements issued after the quarter-end date (preannouncements) by companies that have implemented ERP systems are based on realized earnings. Such announcements are expected to be more accurate than management forecasts, which are based on estimates of future earnings, and may be issued before the quarter-end date. This study finds that the accuracy of management voluntary disclosures and the timeliness of preannouncements improved in the periods following ERP implementation

Show Me the Green: Three Essays on Information Systems Value and Environmental Performance in Global Organizations.

Businesses utilize information systems (IS) to increase revenues, reduce costs, and spur innovation. IS automate tasks, generate and deliver information, and can transform core value creation processes. As climate change and its associated challenges become increasingly relevant to business enterprises worldwide, IS are a key tool in enabling their response. Prior research shows that IS can either aid or inhibit organizational efforts, yet we do not fully understand their influence in this important context. This dissertation presents three essays examining how IS affects financial market value and greenhouse gas emissions performance in large businesses. The first essay (Chapter 2) introduces a method utilized in chapter 3. After finding a surprising dearth of international event studies in the IS discipline, a multiple-factor method is selected from related management literature to estimate international financial market reaction. Its performance relative to the commonly-used single-factor model is evaluated with a Monte Carlo analysis. Error correction improvement of the multiple factor model is calculated to be 44%-99% over the single-factor model for conditions observed in world markets 2000-2012. The second essay (Chapter 3) utilizes the multiple-factor model from chapter 2 to investigate international financial market reaction to Carbon Management Systems (CMS) adoption. CMS, a class of IS, enable the capture and management of carbon footprints. Three main results emerge. First, shareholders do not react positively to CMS announcements, as wealth effects are either not significant or negative, depending on the specification. Second, markets appear to penalize firms in more carbon regulated countries versus others, consistent with theory. Lastly, negative reactions to CMS appear to be dampening over time. The third essay (Chapter 4) examines the impact of IS on firm GHG emissions for large corporations with a presence in North America. This first-of-its-kind analysis finds interaction effects between GHG reduction plans and the physical deployment scope of ERP modules for Enterprise Support (e.g. HR, Finance, Accounting). Corporations with reduction plans in place and the highest 18% of ES physical scope are associated with reduced CO2 emissions. A one-standard-deviation increase in the ES physical scope deployment measure reduces GHG emissions by 46.63% for these companies.PhDBusiness AdministrationUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/113461/1/danrush_1.pd

Market Reactions to Investments in Information Technology: Insight from Warsaw Stock Exchange

Building on the Roztocki and Weistroffer (2009c) explanatory model, this study examines stock market reactions to announcements of information technology investments in Poland, an emerging market and transition economy. Based on 68 announcements by companies traded at the Warsaw Stock Exchange in the period 2002 to 2009, our study confirms some previously published results, but also shows that specific characteristics of announcements play a more important role than has been commonly assumed. Our results indicate that investors in Poland react more positively if systems are acquired from global rather than local vendors. Announcements about completed projects are more positively received than announcements about planned or in-progress projects. Furthermore, announcements in Polish, targeted at existing shareholders, are more likely to be received positively than similar announcements released in English, targeting global investors