How Cloud Computing Impacts Stock Market Prices

Cloud computing is an evolution of computing technology and reflects a shift in the way it is delivered to businesses and individuals. Enterprises can significantly lower their cost of ownership, reduce time to value and faster adapt to changing needs in a globalized economy. Despite research and practice predict productivity increases and cost savings when migrating to the cloud one question remains unanswered: Does the adoption of cloud computing increase the market value of the firm? We try to answer this question by applying the event study methodology on companies that recently announced the deployment of cloud computing. Overall, we find significant positive abnormal returns. We find that investors specifically reward innovative and strategically motivated adoption of cloud computing. As a key implication of our results, we recommend in particular IT executives in large companies within the service industry to reassess their portfolio and foster the adoption of strategic and innovative cloud services.