Impact of Web Portal Announcements on Market Valuations: An Event Study

Organizations providing enhanced electronic services to their customers have exponentially increased in past years. The benefits of web-portals to companies and to customers are well evident and are considered an IT artifact manifested in entry points to Internet-based information presentation and exchange by communities of common interest. Despite much research done on the benefits of web portals to companies, no research exists that focuses on impact of adoption of web-portals on a company’s market valuation. In this paper, the authors look into impact of web-portal announcements on company’s stock prices (market value). Using event-study methodology, they provide empirical evidence on the effect of announcements of web portals on the market valuation of the company for a sample of 25 publicly traded companies in 2008. The study examines stock data to access investors and shareholders’ reactions to web portal announcements. Results indicate that web portal announcements significantly and positively influence investors’ perceptions toward financial worth and future prospects of the company. The authors discuss these findings in detail and present implications for both research and practice. Findings offer insight that can be used by managers and executives in understanding the role and effect of a companies’ market value.