Do shareholders favor business analytics announcements?

Despite the growing acceptance of business analytics (BA) as a tool for making smarter business decisions, past research has rarely investigated shareholder reactions to BA announcements. We use signaling theory and resource-based theory (RBT) as our theoretical lens. The results show that BA announcements generate positive abnormal returns, thereby providing empirical evidence that shareholders view BA as beneficial. The results also suggest that characteristics that are more salient to shareholders are rewarded. Specifically, firms implementing BA systems from market-leading vendors obtain more positive stock market reactions compared with other firms. Announcements convey more benefits to overbought stocks than oversold stocks, and generate higher positive return in firms with high sales growth and high return on assets (ROA). Overall, empirical evidence favors signaling theory over RBT.