Working PapersMani, Deepa. "Greenfield Investments Versus Acquisitions: Capital Market Drivers of R&D Organization in Technology-Intensive Industries"Read Abstract >Close >
Working PapersBarua, Anitesh., Mani, Deepa. "Market Myopia and Firm-Specific Risk: Reexamining the Financial Value of Information Technology (IT) Decisions"Read Abstract >Close >Firm-level studies of the financial impacts of Information Technology (IT) events have often focused on announcement period returns based on the capital asset pricing model (CAPM). This approach may have two sets of distinct but related limitations for many classes of IT events. First, the use of announcement period assumes the market is efficient in its assimilation and pricing of all information about the event. However, a firm not be aware of the organizational changes required for success of the IT event, or may not have the incentive to disclose such information for competitive reasons. Either way, we expect many types of IT events to be characterized by low information disclosure, which, along with investor biases, is likely to impede efficient pricing of the IT event by financial markets. Second, event studies in Information Systems (IS) largely rely on CAPM, which considers only systematic risks in the pricing of expected returns on IT assets, and assumes that idiosyncratic or firm-specific risks are eliminated through efficient diversification. Yet one of the foundations of the IS discipline is the notion that IT matters, largely because firms have different capabilities to develop, deploy and manage IT resources to create value. Thus there is a disconnect between a basic theoretical tenet of the IS field and the methodology deployed to assess the value of IT events. We develop a framework involving the maturity of the IT event and the scope of complementary changes to assess the extent of information disclosure and idiosyncratic risk, which, in turn, indicate the suitability of different methodologies to assess financial value of the IT event. We empirically illustrate our approach for the case of large scale IT and IT-enabled outsourcing, and conclude with implications for future IS research.
Working PapersShmueli, Galit.,Lin, M.,, Lucas, H. "Is More Always Better? Larger Samples and False Discoveries"Read Abstract >Close >The Internet presents great opportunities for research about information technology, allowing IS researchers to collect very large and rich datasets. It is common to see research papers with tens or even hundreds of thousands of data points, especially when reading about electronic commerce. Large samples are better than smaller samples in that they provide greater statistical power and produce more precise estimates. However, statistical inference using p-values does not scale up to large samples and often leads to erroneous conclusions. We find evidence of an over-reliance on p-values in large sample IS studies in top IS journals and conferences. In this commentary, we focus on interpreting effects of individual independent variables on a dependent variable in regression-type models. We discuss how p-values become deflated with a large sample and illustrate this deflation in analyzing data from over 340,000 digital camera auctions on eBay. The commentary recommends that IS researchers be more conservative in interpreting statistical significance in large sample studies, and instead, interpret results in terms of practical significance. In particular, we suggest that authors of large-sample IS studies report and discuss confidence intervals for independent variables of interest rather than coefficient signs and p-values. We also suggest taking advantage of a large dataset for examining how coefficients and p-values change as sample size increases, and for estimating models on multiple subsamples to further test robustness.
Working PapersShmueli, Galit.,Sellers, K. F. "Predicting Censored Count Data with COM-Poisson Regression"Read Abstract >Close >Censored count data are encountered in many applications, often due to a data collection mecha- nism that introduces censoring. A common example is questionnaires with question answers of the type 0,1,2,3+. We consider the problem of predicting a censored output variable Y , given a set of complete predictors X. The common solution would be to use adaptations for Poisson or negative binomial regression models that account for the censoring. We study two alternatives that allow for both over- and under-dispersion: Conway-Maxwell-Poisson (COM-Poisson) regression, and gener- alized Poisson regression models, each with adaptations for censoring. We compare the predictive power of these models by applying them to a German panel dataset on fertility, where we intro- duce censoring of dierent levels into the outcome variable. We explore two additional variants: (1) using the mean versus the median of the predictive count distribution, and (2) ensembles of COM-Poisson models based on the parametric and non-parametric bootstrap. Keywords: over-dispersion, under-dispersion, predictive distribution, mean versus median predictions, ensembles
Working PapersShmueli, Galit.,Koppius, O. (. "The Challenge of Prediction in IS Research"Read Abstract >Close >Empirical research in Information Systems (IS) is dominated by the use of explanatory statistical models for testing causal hypotheses, and by a focus on explanatory power. Predictive statistical models, which are aimed at predicting out-of-sample observations with high accuracy, are rare, and so is attention to predictive power. The distinction between explanatory and predictive statistical models is key, as both types of models play a different, yet essential, role in advancing scientific research. Similarly, explanatory power and predictive accuracy are two distinct qualities of a statistical model, and are measured in different ways. A literature review of MISQ and ISR shows that predictive goals, predictive claims, and predictive statistical models are scarce in mainstream empirical IS research. In addition, we find three questionable common practices: First, even when the stated goal of modeling is predictive, explanatory statistical modeling is often employed. Second, the predictive power of a model is often inferred from its explanatory power. And third, the vast majority of explanatory statistical models lack proper predictive assessment, which is a key scientific requirement. In light of the distinction between explanatory and predictive statistical modeling and power, and current practice in IS, we highlight the main differences between them, focusing on practical issues that confront an empirical researcher in the data analysis process.