（2008）The Added Value of IT Investment：A Demand-Side Perspective.pdfVIP

JOURNAL OF EMERGING TECHNOLOGIES IN ACCOUNTING Vol. 5 2008 pp. 175–187 The Added Value of IT Investment: A Demand-Side Perspective Meihua Koo California State Polytechnic University at Pomona Huey-Yeh Lin National Formosa University of Science and Technology Georgia Smedley University of Missouri at Kansas City ABSTRACT: Can investments in information technology translate into benefits for in- vestors? This study uses Bayesian theory to explore whether the benefits of adopting a technology (that increases the quality of information) extend to the investing com- munity. An added value to firms investing in technology is that such investment may increase the demand for information from outside the firm. As the market demand for this information increases, companies that seek capital in the security markets may have a greater incentive to adopt technologies that increase information quality. Keywords: IT investment; eXtensible Business Reporting Language (XBRL); financial information communication; economics of uncertainty and information. INTRODUCTION ecisions to invest in information technology (IT) are not trivial. During 2002, U.S. Dcompanies alone spent approximately $780 billion on IT investments (Jeffery and Leliveld 2004). Management’s needs to justify this significant capital outlay coupled with the IT industry’s desire to promote IT sales have motivated a good deal of research concerning the costs and benefits of IT investment. This research has focused on potential benefits that may accrue to companies electing to invest in new technology and has gen- erally been approached from two broad perspectives