The Impact of Supply Chain Applications Announcements on the Market Value of Firms

Abstract

Using event study methodology, we show that the announcement of supply chain management (SCM) applications has a positive impact on the market value of firms. When SCM applications are disaggregated according to whether they are stand-alone SCM applications or instead part of an enterprise system (SCM-ES) implementation, we find that the latter carry a significant value enhancement, while the former do not present a significant market reaction. Investors seem to interpret SCM applications as providing a better governance structure for firms; however, signals of greater commitment to change are more valued.