The impact of ICT‐enabled offshoring announcements on share prices

The impact of ICT‐enabled offshoring announcements on share prices Purpose – The purpose of this paper is to determine the impact of announcements regarding information and communication technologies (ICTs)‐enabled offshoring on the share prices of public companies. Design/methodology/approach – The study is carried out by means of an event study. Findings – The finding from this research is that investors do not tend to reward offshoring announcements. It is most likely that the value of the firm will be perceived as unchanged or if there is a reaction, it is most likely to reduce the value of the firm. A positive relation between size of firm and the size of the offshoring contract is found. Also, US investors are found to be more likely to react negatively than UK investors. Research limitations/implications – This study extends the use of event studies in the information systems domain to ICT‐enabled offshoring. Owing to the relatively nascent state of offshoring, and consistent with previous event studies, the data set used in this study is relatively modest. Practical implications – Managers in many types of organisations are currently undertaking or considering offshoring, this study will enable them to understand the possible reactions of shareholders and other stakeholders. Originality/value – This study provides an empirical contribution by undertaking the first event study of offshoring announcements. It is also one of the very few event studies that considers both UK and US‐based companies. Its use of transaction cost economics perspective also adds to the theoretical understanding of offshoring, by demonstrating that investors appear to consider increased transaction costs involved in offshoring will outweigh lower purchasing or production costs. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Enterprise Information Management Emerald Publishing

The impact of ICT‐enabled offshoring announcements on share prices

Loading next page...
 
/lp/emerald-publishing/the-impact-of-ict-enabled-offshoring-announcements-on-share-prices-e9FGcZIVgB
Publisher
Emerald Publishing
Copyright
Copyright © 2009 Emerald Group Publishing Limited. All rights reserved.
ISSN
1741-0398
DOI
10.1108/17410390910949706
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to determine the impact of announcements regarding information and communication technologies (ICTs)‐enabled offshoring on the share prices of public companies. Design/methodology/approach – The study is carried out by means of an event study. Findings – The finding from this research is that investors do not tend to reward offshoring announcements. It is most likely that the value of the firm will be perceived as unchanged or if there is a reaction, it is most likely to reduce the value of the firm. A positive relation between size of firm and the size of the offshoring contract is found. Also, US investors are found to be more likely to react negatively than UK investors. Research limitations/implications – This study extends the use of event studies in the information systems domain to ICT‐enabled offshoring. Owing to the relatively nascent state of offshoring, and consistent with previous event studies, the data set used in this study is relatively modest. Practical implications – Managers in many types of organisations are currently undertaking or considering offshoring, this study will enable them to understand the possible reactions of shareholders and other stakeholders. Originality/value – This study provides an empirical contribution by undertaking the first event study of offshoring announcements. It is also one of the very few event studies that considers both UK and US‐based companies. Its use of transaction cost economics perspective also adds to the theoretical understanding of offshoring, by demonstrating that investors appear to consider increased transaction costs involved in offshoring will outweigh lower purchasing or production costs.

Journal

Journal of Enterprise Information ManagementEmerald Publishing

Published: Apr 17, 2009

Keywords: Share prices; Outsourcing; Off shore investments; Communication technologies

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month