William Hakes- MIS Quarterly Article
1) “Examining the Shareholder Wealth Effects of Announcements of Newly Created CIO Positions” MIS Quarterly; Debabroto Chatterjee, Vernon Richardson, and Robert Zmud. Volume 25, Number 1, March 2001, pp. 43-61.
2) Debabroto Chatterjee, School of Accounting, Information Systems and Business Law- Washington State; Vernon Richardson, Division of Accounting and Information Systems- University of Kansas; Robert Zmud, College of Business- University of Oklahoma.
3) Do announcements of CIO positions positively impact shareholders of public companies?
4) Applied Statistical: This article takes a little theory about the benefits of IT and integrates it with some applied finance to produce an interesting paper.
5) Information technology was once a term limited to companies engaged in highly specific “tech” driven industries, such as software and infrastructure. But information technology has advanced into every industry, and the advent of the CIO to oversee IT is seen by many as a credible signal that a firm recognizes the importance of explicit IT strategies. As these CIO’s oversee the implementation of IT strategies, the question has arisen, “do they add value?” This article measures that question and others as well. The authors take data from the CRSP database and average daily stock market returns vs. those returns of companies 1) announcing CIO’s and 2) implementing CIO driven strategies. They test for abnormal returns over multiple time periods, and the results indicate positive statistically significant “abnormal” returns for such firms. Beyond these initial effects, there is no real persistence during the time periods in question (1987-1994 & 1995-1998). Finally, the study demonstrates that there is also no significant difference in the performance of firms who hire “outside” CIO’s vs. those who hire internally.
6) The article will have appeal to practitioners as well as academics interested in the study of information technology, as well as perhaps finance. The academics may appreciate the OLS methods and results, whereas the practitioners may look to the implications for specific business and investment decisions.
7) As this article integrates some theory with statistical analysis, I see this method of paper as one that I will frequently produce.