Market reactions to E-business outsourcing announcements: An event study

• DOI: 10.1016/j.im.2006.08.002
• Publication Date: 2006-09-12T08:07:19Z
• Authors: Manish Agrawal; Rajiv Kishore; H. Raghav Rao
• Keywords: Event study

Stock markets have reacted favorably to firms who announced their implementation of E-business projects for commercial exploitation. Those that outsourced E-business projects in order to achieve swift execution also achieved abnormal positive returns. Contrary to expectations, outsourcing E-business projects with high task complexity also led to positive results. We analyzed the process and found that these three factors explained more than 20% of the variance in abnormal returns. The results were obtained from an event study of 96 E-business-related announcements, including those made by firms in the S&P500 index during 1999-2002. This paper contains information that should therefore help firms identify E-business projects for outsourcing.