Disruptive information technology innovations and the cost of equity capital: The moderating effect of CEO incentives and institutional pressures

Ariel K.H. Lui, Eric W.T. Ngai, Kwan Yu Lo

Research output: Journal article publicationJournal articleAcademic researchpeer-review

20 Citations (Scopus)

Abstract

Disruptive information technology (IT) innovations not only present opportunities, but also cause uncertain impacts on firm risk that affects the equity financing cost of a firm. This paper used longitudinal data from 146 U.S. listed firms that adopted radio frequency identification (RFID), a disruptive technology that enables supply chain process innovation. Results show that firms that adopted RFID significantly reduced their cost of equity capital, and the reduction was stronger for firms with greater CEO incentive-based compensation and coercive pressure. The findings help managers make strategies that maximize the benefits of disruptive IT innovations.
Original languageEnglish
Pages (from-to)345-354
Number of pages10
JournalInformation and Management
Volume53
Issue number3
DOIs
Publication statusPublished - 1 Apr 2016

Keywords

  • Disruptive IT innovations
  • The cost of equity capital

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems
  • Information Systems and Management

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