A Valuation Model For Information Technology Capability-Enabled Firm Value

ABSTRACT Although the measurement of IT-enabled growth opportunities is an important issue in IT value field, few studies have examined this relationship. Based on the firm valuation theory, we develop a firm value model that includes firm performance and growth opportunities in order to measure the effects of IT capabilities on firm value. It is considered that this model is a more comprehensive and appropriate means to capture IT value. InformationWeek’s IT rankings are used as the database in this study. The findings show that IT contributes to both elements (i.e., firm performance and growth opportunities) of firm value.

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