Information Technology Intensity and the Industry Cost of Equity Capital

The cost of equity capital has been an important topic to both academics and practitioners. In this study, we examine the effect information technology (IT) intensity on the industry cost of equity capital. Findings generally support the idea that IT intensity is a significant factor driving industry cost of equity capital. Further, an interaction between IT intensity and time suggests that IT intensity has decreased the industry cost of equity capital over time. This paper contributes to the literature by furthering our understanding the effects that IT has on a firm's performance by examining via the effect on the industry cost of equity capital.