Corporate Governance and Returns on Information Technology Investment: Evidence from an Emerging Market

44 Pages Posted: 17 Jul 2007

See all articles by Joanna L.Y. Ho

Joanna L.Y. Ho

University of California, Irvine - Accounting Area

Anne Wu

National Chengchi University (Taipei)

Sean Xu

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

Date Written: June 2007

Abstract

Prior studies have reported mixed findings on the impact of corporate IT investment on firm performance. This study investigates the role of corporate governance, an important management control system, in the IT investment-firm performance relationship in the Taiwanese high-tech industries. Two specific corporate governance factors, i.e., board independence and foreign ownership, are explored across firms of different sizes and in industries whose degrees of competitiveness run a wide gamut. Our results show a positive moderating effect of board independence on the IT investment-firm performance relationship, especially when competition intensifies. Furthermore, we find that the association between foreign ownership and firm performance is negative but not significant. Yet, foreign ownership is a significant positive moderator for small firms, suggesting that foreign investors may bring IT expertise to help small firms reap the benefits of using IT.

Keywords: IT investment, Board independence, Foreign ownership, Firm performance, Firm size, Industry competitiveness

JEL Classification: G34, M41, G31

Suggested Citation

Ho, Joanna L.Y. and Wu, Anne and Xu, Sean, Corporate Governance and Returns on Information Technology Investment: Evidence from an Emerging Market (June 2007). AAA 2008 MAS Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1000851 or http://dx.doi.org/10.2139/ssrn.1000851

Joanna L.Y. Ho (Contact Author)

University of California, Irvine - Accounting Area ( email )

Irvine, CA 92697-3125
United States
949-824-4041 (Phone)
949-725-2833 (Fax)

Anne Wu

National Chengchi University (Taipei) ( email )

No. 64, Chih-Nan Road
Section 2
Wenshan, Taipei 11623
Taiwan

Sean Xu

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management ( email )

Clear Water Bay
Kowloon
Hong Kong

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