Evolving governance practices have resulted in boards of directors being made more responsible for creating strategy instead of simply approving strategy. As information technology (IT) becomes more important to the operations of business, IT also becomes more crucial to business strategy. With the shift of responsibility for strategy creation from the executive level to the board level, a number of researchers have recommended that responsibility for the governance of information technology should also shift to the board level. The Sarbanes-Oxley Act has mandated many governance changes in the U.S., and along with additional reports and studies, has influenced governance changes in other jurisdictions. Many of these changes have required increased reliance on information technology, reinforcing the importance of IT to corporate governance. The purpose of this study is to determine if board-level IT focus, board-level IT literacy, governance structures, governance practices, and governance disclosures are associated with firm performance in Canadian companies. This study uses an agency theory approach and quantitative analyses of data from 2004 and earlier from companies that comprised the Toronto Stock Exchange S&P/TSX Composite Index at the end of 2004. Four research questions and 15 hypotheses are investigated. The findings indicate that board-level IT literacy and IT focus are significantly associated with firm performance. Gender diversity was found to be positively associated with performance, but in general, governance structures linked with board independence were found not to be associated with performance. Best practices in stock options and aligning directors' interests with those of the firm through shareholding requirements were found to be positively associated with performance. Only a weak link was found between disclosure practices and firm performance.
|Adviser||Judith L. Forbes|
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