Does adoption of cloud computing matter? The economic worth of cloud computing implementation

Abstract

The present research investigates the impact of cloud computing adoption on the market value of a firm using an event study and firm performance measures. Using a resource-based view, the efficient market hypothesis was used to analyse a sample of 136 companies that adopted cloud computing and are listed in one of the US stock exchanges, it is found that cloud computing announcements are associated with negative market returns but these returns are not statically significant. The trading volume and the risk of these companies, showed a significant increase and both were found to be statistically significant. There was no significant increase in the year after the cloud adoption relative to the year before the adoption. Return on sales exhibits a similar pattern. We do believe the present research shows that cloud computing adoption does provide financial benefits to the adopting firms.