David C. Hayes, James E. Hunton and Jacqueline L. Reck
University of South Florida

ABSTRACT:

The objective of this research is to examine how the capital market responds when a firm announces that it plans to implement an enterprise resource planning (ERP) system. This is the first study to investigate the extent to which ERP systems are deemed to add market value to business organizations. Study findings indicate an overall positive reaction to initial ERP announcements. Further analyses suggest that the reaction is most positive for small/healthy firms. Finally, the market response to larger ERP vendors, as reflected by PeopleSoft and SAP, is significantly more positive than to smaller ERP vendors.

Keywords: enterprise resource planning (erp); event study; management information systems; accounting information systems.

Data Availability: Data is available from the authors upon request.