National Corporate Governance Codes and IT Governance Transparency in Annual Reports

Steven De Haes,Tim Huygh,Laura Caluwe,Anant Joshi

doi:10.4018/jgim.2019100105

Abstract

IT governance is concerned with the oversight of IT assets, their contribution to business value and the mitigation of IT-related risks. Emerging research calls for more board level engagement in IT governance and identifies profound consequences for digitized organizations in case the board is not involved. Against this context, this article analyses how corporate governance codes are guiding boards to provide transparency on how they treat IT governance. The findings show that only the South African corporate governance code, King III, contains a significant amount of IT (governance)-related content. As a second objective, this article builds on these findings by providing an exploratory insight in the contemporary state of IT governance transparency in Belgian and South African companies. This way, the influence of the national corporate governance code on IT governance transparency is explored. The authors' findings show that South African firms tend to be more concerned with IT governance transparency in their annual reports than Belgian firms, given a comparable IT strategic role and ownership structure. Accordingly, the case is made for including more IT (governance)-related guidance in national corporate governance codes, as this might enable companies to be more transparent about their IT governance.

Highlights

IT governance is concerned with optimizing the business value generated through IT assets, while simultaneously mitigating IT-related risks (Weill & Ross, 2004)
The findings show that only the South African corporate governance code, King III, contains a significant amount of IT-related content
The group with the highest average disclosure rate for each disclosure category is bold-faced. This first global overview of IT governance transparency between both groups shows that the listed South African financial services organizations seem to be more concerned with disclosing on their IT governance than the listed Belgian financial services organizations. This observation holds for all disclosure categories of the IT governance transparency framework

Summary

Introduction

IT governance is concerned with optimizing the business value generated through IT assets, while simultaneously mitigating IT-related risks (Weill & Ross, 2004). The issue of IT governance transparency/ disclosure, which is about providing stakeholders with information about the way the organization is governing its IT assets, has received little attention in academic research (Joshi, Bollen, & Hassink, 2013). A selection of national corporate governance codes is analyzed with respect to the included IT (governance)-related content. Building on these findings, the contemporary state of IT governance transparency in Belgian and South African companies are compared by means of their annual reports. While controlling for the IT strategic role (i.e. financial services organizations) and firm ownership structure (i.e. listed companies), the investigation of the effect of the national corporate governance code on a firm’s tendency to disclose on its IT governance is an important contribution to the body of knowledge about IT governance transparency

Objectives

Results

Conclusion