| Enterprise resource planning (ERP) systems are the most ambitious, sophisticated use of information technology (IT) by businesses to date. Managers must compare the massive investments of resources and time to be committed to an ERP implementation against the significant benefits that may be derived from ERP systems in an environment in which traditional capital budgeting decision-making models may not be appropriate.; The purpose of this study is to determine if ERP investments enhance firm value by answering questions other studies have not answered. This study is motivated both by an appreciation of the magnitude of a company's decision to invest in an ERP system and by the fact that other research to date contains limitations of scope or method that may reduce the reliability of reported results. Accordingly, this study examines abnormal stock market returns around ERP investment announcement dates, and accounting performance measures over two and four years, for matched samples of announcing and non-announcing firms in an effort to identify whether changes in stock returns or accounting performance measures are attributable only to announcing firms or to other matched firms as well.; The results of this research are significantly more reliable than results of other studies because this research examines announcing firm value using abnormal stock returns around announcement date and accounting performance measures across four years. In addition, this study uses matched pairs sampling and testing, which remove potential explanations from the interpretation of announcing firm results. That is, abnormal stock returns and accounting performance metrics for announcing firms are compared against the same measures for matched non-announcing firms. Finally, this study's model construction, hypothesis development, and testing methodologies all contribute to the robustness of results. |
