Title

Further Evidence On Shareholder Wealth Effects Of Announcements For Newly Created Cio Positions

Keywords

Event study; IT assets; IT leadership; IT management

Abstract

Chatterjee, Richardson and Zmud (2001) provided evidence of abnormal stock returns associated with the announcements of new CIO positions, indicating a positive reaction in the stock market to the announcements. However, an examination of the behavior of analysts who follow the firms used in the Chatterjee et al. sample finds that just over 50% of the firms actually had analysts regularly following them; and the vast majority either reflected no changes in earnings forecasts or experienced a downward adjustment. A systematic reexamination of the results reveals the following: (1) firms not tracked by analysts demonstrate positive abnormal returns at the event date; (2) Chatterjee et al.'s findings of positive abnormal returns from new CIO position announcements appear to be driven by the sub sample of firms not tracked by analysts; (3) analyst tracked firms generally do not yield abnormal returns at the event date but they do exhibit abnormal returns in the days before the announcement indicating analysts may be using leaked information from management; and (4) despite apparently disclosing private information from management to their clients, analysts do not disclose this information through revisions of earnings forecasts. Overall, our results significantly strengthen the understanding of the phenomenon while further supporting Chatterjee et al.'s conclusion that new CIO position announcements are important to the capital markets. © 2006, Authors. All rights reserved.

Publication Date

9-19-2006

Publication Title

Data Base for Advances in Information Systems

Volume

37

Number of Pages

176-191

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1145/1161345.1161365

Socpus ID

79951774978 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/79951774978

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