Putting a Value on Openness: The Effect of Product Source Code Releases on the Market Value of Firms

This study examines the effect of releasing the source code of commercial software products as open source software on the market value of firms. Using a sample of 30 software companies in the time span from 1 January 1999 to 30 April 2007, I find that market valuation is influenced by investor sentiment???abnormal returns take a curvilinear shape over time???and the business model firms choose for their OSS efforts???non-existence of an explicit revenue model is punished by the capital market. From my findings, I deduce several implications for IT-related event studies and research on open innovation processes.