, looks at the market's assessment of the returns to IT investments in Australia. Co-authored by Dr Ronan Powell, a senior lecturer in finance at the School of Banking and Finance within the Australian School of Business, and Dr Foaud Nagm, who completed his PhD in information systems at the School of Information Systems, Technology and Management at the University of NSW, the research paper takes an 'event study' approach -- going back over two decades of market data, correlating it with company IT investment announcements and extensively interviewing about 100 senior executives.

The findings: IT investments add value to shareholder wealth. Preliminary results indicate the market responds positively to announcements. It generally manifests as a spike in risk-adjusted returns on the announcement day -- 3.15 per cent on average.

"It is very difficult to apply valuation metrics to IT projects," Powell said. "So we thought, 'let's try and give CIOs a different perspective. As a CIO, if you make an announcement that you are going to spend $200 million on a project, you want to know whether the market liked it.

"Analysts go through [stock exchange] announcements in extreme detail, but it is sometimes very difficult to work out exactly where the value is coming from. This research gives CIOs an idea of how they're doing in terms of metrics."

Powell considers IT in the same vein as research and development (R&D) which has long been considered a yardstick for economic health.