Financial performance, CEO compensation, and large-scale information technology Outsourcing decisions

• 成果类型: Article
• 署名作者: Hall, JA; Liedtka, SL
• 署名单位: Lehigh University
• 刊物名称: JOURNAL OF MANAGEMENT INFORMATION SYSTEMS
• ISSN/ISSBN: 0742-1222
• DOI: 10.1080/07421222.2003.11045838
• 发表日期: 2005
• 页码: 193-221
• 关键词: free cash flow; executive-compensation; managerial incentives; firm performance; determinants; turnover; earnings; CHOICE; equity; plans

摘要

The inherent riskiness of large-scale information technology (IT) outsourcing led us to investigate what motivates large-scale IT outsourcing decisions. We employed fixed-effects logistical regressions to examine publicly available data for 51 firms that announced their decisions to outsource all or a large portion of their IT function during the 1993-2001 period. Results suggest that incentives created by CEO stock options and overall compensation mix significantly influence decisions to outsource. We thus provide the first evidence of a relationship between managerial self-interest and IT outsourcing. Additional results suggest that poor overall firm performance, poor cost control, and short-term cash needs also drive large-scale IT outsourcing, but provide no evidence that firms outsource IT to reduce leverage. Overall, we conclude that CEOs consider several personal and firm-level financial factors, including factors unrelated to IT cost and performance, when making large scale IT outsourcing decisions. Our conclusion has numerous implications regarding long-term IT performance, long-term firm performance, CEO contracting and financial reporting.