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

Abstract

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.