An examintion of the long-term business value of specific investments in information technology using regression discontinuity methodology

Understanding the business value of investments in information technology (BVIT) continues to be of intense interest to academics, managers and investors. Much of the BVIT research has examined the effect of a firm's overall investment in information technology (IT) on short-term measures of earnings, which has produced mixed results. This dissertation uses Regression Discontinuity methodology to examine the change in a firm's long-term market value after its announcement of specific IT investments. Overall, there were positive alpha and beta shifts after specific investment announcements. These shifts were more pronounced after the post-productivity paradox period and for very IT-intensive firms as well as firms that invested in informate and transformate information technologies. This dissertation contributes to the BVIT literature by addressing the limitations of event study methodologies that focus on overall IT investments using small event-windows.