The value of being innovative in information technology

Abstract

We developed this paper in order to better understand the effects of being innovative in the use of Information Technology (IT). Through a measure for listed companies that are innovative in IT use, we developed a quantitative analysis considering the investments made by institutional investors in these companies. As institutional investors, the sample includes observations from 2,880 mutual funds, since managers of these funds are presumed to be experts in choosing good companies to invest financial resources. Regarding the companies’ stocks, the final sample of this study is comprised of 592 observations during the period from 2013 to 2015. The main result obtained in this paper indicates that “innovative companies in IT use” receive more investments from institutional investors when compared with the other firms. These results are robust to other variables presented by academic literature as relevant factors to understand resources allocation in financial market.