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PurposeThe purpose of this paper is to determine the impact of announcements regarding information and communication technologies (ICTs)‐enabled offshoring on the share prices of public companies.Design/methodology/approachThe study is carried out by means of an event study.FindingsThe finding from this research is that investors do not tend to reward offshoring announcements. It is most likely that the value of the firm will be perceived as unchanged or if there is a reaction, it is most likely to reduce the value of the firm. A positive relation between size of firm and the size of the offshoring contract is found. Also, US investors are found to be more likely to react negatively than UK investors.Research limitations/implicationsThis study extends the use of event studies in the information systems domain to ICT‐enabled offshoring. Owing to the relatively nascent state of offshoring, and consistent with previous event studies, the data set used in this study is relatively modest.Practical implicationsManagers in many types of organisations are currently undertaking or considering offshoring, this study will enable them to understand the possible reactions of shareholders and other stakeholders.Originality/valueThis study provides an empirical contribution by undertaking the first event study of offshoring announcements. It is also one of the very few event studies that considers both UK and US‐based companies. Its use of transaction cost economics perspective also adds to the theoretical understanding of offshoring, by demonstrating that investors appear to consider increased transaction costs involved in offshoring will outweigh lower purchasing or production costs.

The authors thank the Editors of this Special Issue, including the Managing Guest Editor Dr Philippe Lassou, and the two anonymous reviewers for their insightful feedback and comments that greatly improved our manuscript. The authors are also immensely grateful to Professor Teerooven Soobaroyen for his useful suggestions and critique of earlier versions of this paper, and whose feedback has helped to improve its quality significantly. Finally, we acknowledge the input of delegates at the 9th Asia-Pacific Interdisciplinary Research in Accounting (APIRA) Conference, held in Auckland, New Zealand. ; Peer reviewed ; Postprint

This study develops a 'comply or explain' index which captures compliance and quality of explanations given for non-compliance with the corporate governance codes in UK and Germany. In particular, we explain, how compliance and quality of explanations provided in non-compliance disclosures, and various other internal corporate governance mechanisms, affect the market valuation of firms in the two countries. A dynamic generalised method of moments (GMM) estimator is employed as the research technique for our analysis, which enabled us to control for the potential effects of endogeneity in our models. The findings of our content analysis suggest that firms exhibit significant differences in compliance, board independence and ownership structure in both countries. The 'comply or explain' index is positively associated with the market valuation of UK firms suggesting that compliance and quality governance disclosure is value relevant in the UK. Institutional blockholders' ownership is however, negatively associated with the market value of firms, which raises questions about the monitoring role of institutional shareholders in both countries. We argue that both compliance and explanations given for non-compliance are equally important, as long as valid reasons and justifications for non-compliance are provided by the reporting companies. These findings thus imply that the 'comply or explain' principle is working well and that UK and German companies could benefit from the flexibility offered by this principle. With respect to the role of board size, board independence, ownership structure, and institutional ownership of firms, this study offers policy implications.