Management Information Systems Commons^™

The Value Relevance Of Enterprise Resource Planning Information, Jayantha Wickramasinghe, Raymond Mcnamara

Ray McNamara

This paper examines whether ERP systems contribute to enterprise value. An ERP Value Relevance Model is developed and tested with data from 60 matched pairs of ERP–adopter/ non–adopter firms. Two classes of tests are designed: performance relevance and value relevance. Tests of performance relevance show ERP–adopter firms do not achieve significant positive abnormal earnings until year four of the five–year test period. Tests of value relevance show the market responds significantly to ERP adoption in year two only. This early response in the year following the year of adoption suggests a significant early market expectation of these systems. However, this …