Information and Communication Technology (ICT), Corporate Governance, and Firm Performance: An International Study

Abstract

We examine the association between ICT investment, corporate governance and firm performance. Using an international sample of 62,199 firm-year observations from 42 countries, we find that ICT investment and corporate governance mechanisms (i.e., board independence and foreign ownership) on their own are not directly associated with firm performance. However, ICT investment is associated with higher firm performance (i.e., ROA) when moderated by either board independence or foreign ownership. Further, this moderating relationship differs between small versus large firms, competitive versus less competitive industries. We also find that the ICT investment-firm performance relationship is more significant among countries with a high level of internet use, access to finance, and innovative capacity.