Corporate Governance Performance

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CORPORATE GOVERNANCE AND FIRM PERFORMANCE: THE INFLUENCE OF STRUCTURES, PROCESSES, AND INFORMATION TECHNOLOGY by Douglas A Peebles

A Dissertation Presented in Partial Fulfillment Of the Requirements for the Degree Doctor of Philosophy

Capella University February 2007

UMI Number: 3253618

Copyright 2007 by Peebles, Douglas A. All rights reserved.

UMI Microform 3253618 Copyright 2007 by ProQuest Information and Learning Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code.

ProQuest Information and Learning Company 300 North Zeeb Road P.O. Box 1346 Ann Arbor, MI 48106-1346

© Douglas A. Peebles, 2007

CORPORATE GOVERNANCE AND FIRM PERFORMANCE: THE INFLUENCE OF STRUCTURES, PROCESSES, AND INFORMATION TECHNOLOGY by Douglas A. Peebles has been approved February 2007 APPROVED: JUDITH L. FORBES, Ph.D., Faculty Mentor and Chair PERRY C. HAAN, DBA, Committee Member CHARLES H. DAVIS, Ph.D., Committee Member ACCEPTED AND SIGNED: ____________________________________ JUDITH L. FORBES, Ph.D.

____________________________________ Kurt Linberg, Ph.D. Dean, School of Business & Technology

Abstract

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 Gender diversity was found to be

significantly associated with firm performance.

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.

Dedication To my wife Mar, my daughter Andrea, and my son Mason. Without their patience and support, this would not have been possible

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Acknowledgments The actual writing of a dissertation is a solo effort but the process of creating a dissertation involves considerably more people than the author. I would like to express my sincere appreciation to Dr. Judith Forbes, my mentor, for her ongoing support and guidance. She helped to make the process clear and manageable. My thanks to Dr. Perry Haan and Dr. Charles Davis, the other members of my committee, for their considerable effort reviewing, probing, and identifying opportunities for improvement. A special and belated note of appreciation goes to Dr. George Wesolowsky, who during my MBA program so many years ago, made the study of Management Science interesting and relevant. I would also like to...
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