The Impact of Technology and Regulatory Changes on the Relationship between a Firm's External Governance Index and Its Financial Performance and Earnings Management

Kwon, Sung S.; Wang, Haiping; Nasreen, Taslima

doi:10.2139/ssrn.2201270

Cited by 1 publication

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“…Due to their personal interests, corporate managers tend to influence or distort the process of preparing financial statements [64]. Kwon et al [65] argue that corporate managers are incentivized to manipulate financial earnings either directly or through indirect accounting procedures due to information asymmetry, opportunistic behavior, and discretionary decision-making power. Some studies have also considered CG structures and corporate performance [66][67][68][69][70].…”

Section: Cg/itg Mechanisms Financial Performance and Earnings Managementmentioning

confidence: 99%

Information Technology Governance and Corporate Boards’ Relationship with Companies’ Performance and Earnings Management: A Longitudinal Approach

Singh

Alhulail

2023

Sustainability

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In accordance with the segregation of oversight from management decision making, the board-level information technology governance is accountable for supervising managerial IT activities. This research empirically analyzes the impact of board-level IT governance on the performance and earnings management practices of Saudi Arabian stock exchange (Tadawul)-listed companies between 2008 and 2020. The study sample includes cross-sectional time-series data from 154 firms with 18,018 firm-year observations. This study used regression analysis and other econometric models to examine probable endogeneities. The findings show that only the return on assets’ operational performance is positively and significantly related to board-level IT governance among the three performance metrics (return on assets, return on equity, and Tobin’s Q). This indicates that a higher proportion of members with IT experience and the presence of a board-level IT professional as chief information officer/chief technology officer and an IT committee positively impact operational performance. Finally, board-level IT governance competence and other governance attributes do not deter earnings management practices. Therefore, countries like Saudi Arabia should enhance their corporate governance environment considering the increasing significance of IT governance (control, service, and monitoring). There is also a need to review provisions of the Saudi Arabia Corporate Governance Regulations, especially for board composition, the appointment of independent and IT-literate directors, and penalties for non-compliance with regulations.

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Section: Cg/itg Mechanisms Financial Performance and Earnings Managementmentioning

confidence: 99%

Information Technology Governance and Corporate Boards’ Relationship with Companies’ Performance and Earnings Management: A Longitudinal Approach

Singh

Alhulail

2023

Sustainability

View full text Add to dashboard Cite

show abstract

The Impact of Technology and Regulatory Changes on the Relationship between a Firm's External Governance Index and Its Financial Performance and Earnings Management

Cited by 1 publication

References 0 publications

Information Technology Governance and Corporate Boards’ Relationship with Companies’ Performance and Earnings Management: A Longitudinal Approach

Information Technology Governance and Corporate Boards’ Relationship with Companies’ Performance and Earnings Management: A Longitudinal Approach

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