Technology Adoption as a Predictive Measure of Financial Performance

This study examines the connection between technology adoption and the financial performance of firms measured as daily stock returns. Using an event study methodology, I test the hypothesis that technology adoption is a statistically significant predictor of abnormal returns. Specifically, I analyze the adoption of cloud-based and Software-as-a-Service technology by firms in the Software and Computer Services industries. The resulting empirical analysis does not identify a statistically significant relationship between technology adoption and abnormal returns. From the evidence, I cannot conclude that technology adoption positively impacts the financial performance of firms. I conclude that either the limited nature of information and narrow scope of this study prevented an existing relationship from being measured, or a relationship does not exist.