Journal
INFORMATION & MANAGEMENT
Volume 53, Issue 3, Pages 345-354Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.im.2015.09.009
Keywords
Disruptive IT innovations; The cost of equity capital
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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. (C) 2015 Elsevier B.V. All rights reserved.
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