Competing and complementary strategic signals: The versatile relationship between CDO appointments and companies’ stock market value

Companies grapple with the challenge of effectively managing the profound changes brought about by digital technologies. As companies seek to navigate these challenges, the role of chief digital officers (CDOs) has gained prominence, with increasing numbers appointed to lead digital initiatives. While extant literature has primarily explored CDOs’ roles and company-internal considerations, this study takes a market view, investigating the impact of CDO appointments on companies’ stock market value. Drawing on signaling theory and employing an event study with a comprehensive data sample of 307 CDO announcements and corresponding stock prices in the timeframe 2009-2020, this research delves into the conditions of CDO appointments influencing stock market reactions positively or negatively. The analysis considers the type of appointment and the power profile of CDOs, revealing nuanced insights into how these factors shape investors’ perceptions of a company’s future prospects. Furthermore, the study connects with the findings of chief information officer (CIO) research by systematically examining and contrasting reactions to CDO and CIO appointments across different timeframes. Overall, this study makes a significant contribution by disentangling competing and complementary signals CDO appointments may send regarding CDOs’ influence on organizations’ future prospects.