Information technology and financial performance: The impact of being an Internet-dependent firm on stock returns

The choice of a particular technology to implement a firm's business strategy may impact the firm's market performance. This study assesses the impact of being an Internet-dependent firm on a firm's stock valuation. The empirical results indicate that in a booming economy, Internet-dependent firms have lower excess returns than non-Internet firms. These high returns can be explained by the fact that in such an economy, Internet stocks trade at relatively higher prices than non-Internet stocks. Therefore, choosing a particular technology to implement business strategy may have a significant impact a firm's stock performance.