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IT Governance and Firm Performance: Empirical Study From Saudi Arabia

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  • Allam Hamdan
  • Reem Khamis
  • Mohammed Anasweh
  • Mukhtar Al-Hashimi
  • Anjum Razzaque

Abstract

This study provides additional evidence on information technology (IT) governance and its relationship to firm performance in emerging markets. It aims primarily to determine the level of IT governance in Saudi Arabian companies; it also aims at examining the impact of IT governance on the firm performance. The study target sample is 131 companies taken from 20 sectors of the Saudi financial market; during the year 2017. The researchers have used the IT-related backgrounds of the members of the board of directors as an indicator of IT governance. The researchers have also used another group of corporate governance indicators in addition to a set of control variables. The performance of the companies has been referred to as the operational performance which is represented as Return on Assets (ROA) and the financial performance as the Return on Equity (ROE). The descriptive results have been shocking. The study has shown a sharp decline in IT governance in Saudi companies; only 15% of companies have members of the board of directors with IT-related backgrounds, and the IT governance is not adopted or used in many important sectors. However, the regression analysis shows that there is a positive impact on IT governance only on the operational performance of Saudi companies. The results of this study provide a significant indicator of IT governance in Saudi companies. These results can be also used to develop the corporate governance code to focus more on IT governance.

Suggested Citation

  • Allam Hamdan & Reem Khamis & Mohammed Anasweh & Mukhtar Al-Hashimi & Anjum Razzaque, 2019. "IT Governance and Firm Performance: Empirical Study From Saudi Arabia," SAGE Open, , vol. 9(2), pages 21582440198, April.
    • Handle: RePEc:sae:sagope:v:9:y:2019:i:2:p:2158244019843721
    DOI: 10.1177/2158244019843721
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    References listed on IDEAS

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    1. Adriano Olímpio Tonelli & Paulo Henrique Souza Bermejo & Pâmela Aparecida dos Santos & Larissa Zuppo & André Luiz Zambalde, 2017. "It governance in the public sector: a conceptual model," Information Systems Frontiers, Springer, vol. 19(3), pages 593-610, June.
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    6. Allam Hamdan, 2018. "Board interlocking and firm performance: the role of foreign ownership in Saudi Arabia," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 14(3), pages 266-281, March.
    7. Lunardi, Guilherme Lerch & Becker, João Luiz & Maçada, Antonio Carlos Gastaud & Dolci, Pietro Cunha, 2014. "The impact of adopting IT governance on financial performance: An empirical analysis among Brazilian firms," International Journal of Accounting Information Systems, Elsevier, vol. 15(1), pages 66-81.
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