The economic worth of cloud computing adoption: A financial analysis

Aurelia Nicholas-Donald, University of Texas at El Paso

Abstract

Using resource based view theory and efficient market hypotheses as a basis, this study examined the impact of cloud computing adoption on the market value of the firm using an event study perspective and firm performance perspective. The study's population was chosen based on their participation on a US stock exchange. Using a sample of 139 cloud computing adoption announcements, I found that the announcement of cloud computing adoption is associated with negative abnormal market returns however the effect is not statistically significant. The trading volume showed a significant increase but this increase was not statistically significant. The risk, β, showed an increase but was not statistically significant. Last I investigated firm performance and derived the return on assets (ROA), return on sales (ROS) and selling general and administrative (SG&A) costs for the firms that adopted cloud computing. Expected were an increase in ROA and ROS and a decrease in SG&A. Rather, ROA and ROS both showed a decrease in value. The mean SG&A shows a decrease in the year after cloud computing adoption. I conclude with potential reasons for the findings . There were several limitations, lack of direct information from the firms, and a small sample size due to the lack of announcements. Despite, this study's results further acknowledge that cloud computing adoption does provide some financial impact on the adopting firms.^

Subject Area

Business administration|Information technology|Commerce-Business

Recommended Citation

Nicholas-Donald, Aurelia, "The economic worth of cloud computing adoption: A financial analysis" (2015). ETD Collection for University of Texas, El Paso. AAI3711319.
http://digitalcommons.utep.edu/dissertations/AAI3711319

Share

COinS