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

doi:10.1016/j.im.2015.09.009

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

The Hong Kong Polytechnic University

Research output: Journal article publication › Journal article › Academic research › peer-review

50 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 language	English
Pages (from-to)	345-354
Number of pages	10
Journal	Information and Management
Volume	53
Issue number	3
DOIs	https://doi.org/10.1016/j.im.2015.09.009
Publication status	Published - 1 Apr 2016

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 9 Industry, Innovation, and Infrastructure

Keywords

Disruptive IT innovations
The cost of equity capital

ASJC Scopus subject areas

Management Information Systems
Information Systems
Information Systems and Management

More information

10.1016/j.im.2015.09.009

Cite this

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AB - 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.

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

Abstract

UN SDGs

Keywords

ASJC Scopus subject areas

More information

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