The Influence Of The Adoption Of Innovative Information Technology On The Cost Of Equity

With the vigorous development of innovative information technology represented by RFID technology,domestic and foreign listed companies are also concerned about their impact on long-term investment returns.Most of the existing researches focus on the impact of information technology adoption on short-term market performance,and the study of Chinese listed companies adopting RFID technology to explore its impact on the cost of equity capital is coming into being.This paper used 102 listed companies as sample data,which released RFID technology adoption announcement during January 1,2003 to January 1,2014.This paper used propensity score matching method to filter out control enterprise and used the long-term event study to approach to jointly examine the response of the capital market to innovative information technology and the factors that affect this response from 2 years ago to 3 years later.In this paper,one factor analysis of variance,correlation test and multiple linear regression analysis are carried out to verify the hypothesis.Results show that firms that:(1)After the adoption of information technology,the cost of equity capital has decreased significantly,that is,the adoption of innovative information technology represented by RFID will significantly reduce the cost of equity capital.(2)The reduction was stronger for firms with greater financial slack,larger ROE,smaller financial leverage,higher Tobins'Q and higher labor productivity.(3)Firm size,ROA,sales and management intensity,sales growth,inventory days,industry categories and adoption years have no significant influence.At the theoretical level,this paper fund the reduction of the cost of equity capital caused by the adoption of innovative technology in domestic enterprises is not exactly the same as that of the foreign countries.For example,the firm size,return on assets,sales and management intensity,sales growth,inventory days,industry categories and adoption years have a significant effect in studies abroad,but has no significant effect the at home.At the practical level,after the enterprises adopt the innovative information technology,the cost of the equity capital of the enterprises is significantly reduced.Therefore,enterprises can safely adopt RFID technology and other innovative information technology without having to worry too much about the cost and risk brought by such innovative information technology.Meanwhile,in the process of adopting innovative information technology,enterprises should maintain high financial slack,ROE,Tobins'Q,labor productivity,and reduce financial leverage.The findings help managers make strategies that maximize the benefits of IT inno-vations.