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The value impact of strategic intent on firms engaged in information systems outsourcing

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  • Beasley, Mark
  • Bradford, Marianne
  • Dehning, Bruce

Abstract

While information systems outsourcing has been on the rise in recent years, empirical evidence about whether IS outsourcing is value creating for shareholders is limited. Little is known about what factors influence the relation between information systems outsourcing and firm value. This study examines the effect of information systems outsourcing announcements on firm value by analyzing whether equity market reactions are associated with the management's strategic intent for outsourcing and firm characteristics of the outsourcing firm. After examining 103 IS outsourcing announcements made during the period from 1996 to 2003, results suggest that value is created for firms outsourcing with short-term operational intent rather than for longer term strategic reasons. In addition, the increase in firm value from an IS outsourcing announcement is positively associated with the firm's operating asset efficiency and the firm being in a service industry.

Suggested Citation

  • Beasley, Mark & Bradford, Marianne & Dehning, Bruce, 2009. "The value impact of strategic intent on firms engaged in information systems outsourcing," International Journal of Accounting Information Systems, Elsevier, vol. 10(2), pages 79-96.
    • Handle: RePEc:eee:ijoais:v:10:y:2009:i:2:p:79-96
    DOI: 10.1016/j.accinf.2008.08.001
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    Cited by:

    1. Deepa Mani & Anitesh Barua & Andrew B. Whinston, 2013. "Outsourcing Contracts and Equity Prices," Information Systems Research, INFORMS, vol. 24(4), pages 1028-1049, December.
    2. Kartik Kalaignanam & Tarun Kushwaha & Jan-Benedict E. M. Steenkamp & Kapil R. Tuli, 2013. "The Effect of CRM Outsourcing on Shareholder Value: A Contingency Perspective," Management Science, INFORMS, vol. 59(3), pages 748-769, July.
    3. Anitesh Barua & Deepa Mani, 2018. "Reexamining the Market Value of Information Technology Events," Information Systems Research, INFORMS, vol. 29(1), pages 225-240, March.
    4. Fábio Albuquerque & Paula Gomes Dos Santos, 2023. "Recent Trends in Accounting and Information System Research: A Literature Review Using Textual Analysis Tools," FinTech, MDPI, vol. 2(2), pages 1-27, April.
    5. Cullinan, Charles P. & Zheng, Xiaochuan, 2015. "Outsourcing accounting information systems: Evidence from closed-end mutual fund families," International Journal of Accounting Information Systems, Elsevier, vol. 17(C), pages 65-83.
    6. Obsatar Sinaga & Djoko Roespinoedji & Mohd Haizam Mohd Saudi & Erlane K. Ghani, 2019. "The Role of Management Accounting Systems, Energy Efficiency and Organizational Innovation in driving Competitive Advantage and Firm Performance," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 395-402.
    7. Dahlgrün, Philipp W. & Bausch, Andreas, 2019. "How Opportunistic Culture Affects Financial Performance in Outsourcing Relationships: A Meta-Analysis," Journal of International Management, Elsevier, vol. 25(1), pages 81-100.
    8. Cao, Jian & Calderon, Thomas & Chandra, Akhilesh & Wang, Li, 2010. "Analyzing late SEC filings for differential impacts of IS and accounting issues," International Journal of Accounting Information Systems, Elsevier, vol. 11(3), pages 189-207.
    9. Paolo Popoli, 2017. "Conceptualizing Relational Resources as Critical Factor for IT Outsourcing Success," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(10), pages 1-43, September.
    10. Kobelsky, Kevin W. & Robinson, Michael A., 2010. "The impact of outsourcing on information technology spending," International Journal of Accounting Information Systems, Elsevier, vol. 11(2), pages 105-119.
    11. Premuroso, Ronald F. & Skantz, Terrance R. & Bhattacharya, Somnath, 2012. "Disclosure of outsourcing in the annual report: Causes and market returns effects," International Journal of Accounting Information Systems, Elsevier, vol. 13(4), pages 382-402.
    12. Herz, Thomas Ph. & Hamel, Florian & Uebernickel, Falk & Brenner, Walter, 2013. "Toward a model of effective monitoring of IT application development and maintenance suppliers in multisourced environments," International Journal of Accounting Information Systems, Elsevier, vol. 14(3), pages 235-253.

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