Publications
Publications
- 2020
- HBS Working Paper Series
Going Digital: Implications for Firm Value and Performance
By: Wilbur Chen and Suraj Srinivasan
Abstract
We examine firm value and performance implications of the growing trend of non-technology companies adopting digital technologies, using a measure based on the disclosure of digital words in the business description section of 10-Ks. Digital adoption is associated with a market-to-book ratio 8–26% higher than industry peers. Part of the differences in market-to-book is explained by accounting capitalization restrictions, which we estimate to explain roughly 15% of the differences. Portfolios formed on digital disclosure earn a DGTW-adjusted return of 36% over a 3-year horizon and a monthly alpha of 57-basis-points. We also find significant increases in asset turnover conditional on digital activities, while also finding significant declines in margins and sales growth.
Keywords
Digital Technologies; Business Ventures; Technology Adoption; Valuation; Performance; Management; Experience and Expertise
Citation
Chen, Wilbur, and Suraj Srinivasan. "Going Digital: Implications for Firm Value and Performance." Harvard Business School Working Paper, No. 19-117, May 2019. (Revised July 2020.)
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