Does leadership matter? The effects of information technology expertise on the market value and performance of a firm

This dissertation examines the stock market reaction to 474 announcements of hiring chief information officers (CIOs) in the 1987--2002 period, and firm performance for periods up to two years following the CIO appointment. The study reports that the announcements are associated with significantly positive abnormal returns (0.48 percent). The returns are more pronounced when the new CIO is hired from an IT leader firm (1.94 percent). Abnormal returns are significantly positive related with the CIO's level of education and high-technology firms, and negatively related with firm size. In addition, there is no significant difference in market reaction between the announcements that publicize the creation of a new position and those that imply the filling of an existing position with new hires. Further, the study finds an association between the appointment of the new CIO and subsequent improvement in the accounting measures of profitability. Findings reveal that CIO firms outperform their matched firms and their industry counterparts for the two years following the announcements relative to the year prior to the CIO appointment.