Does Information Technology Spend Impact On Company Performance? Evidence From Accounting And Market-Based Measures

Abstract

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, Tobin’s q, a market valuation measure, indicated a strong positive relationship that supported the notion that investment in information technology can improve future company performance.