While the information systems scholarly and practice literatures both stress the importance of senior executive engagement with IT management, the recommendations for doing so remain, at best, limited and general. Examining the influence of serious IT-related deficiencies on CEO/CFO turnover within the post-SOX financial reporting context, specific CEO/CFO IT management responsibilities are identified: CEOs are shown to be held accountable for global IT management responsibilities, and CFOs are shown to be held accountable for demand-side IT management responsibilities. Implications for information systems research, management research, and information systems practice are provided.
In this article, the association between the strength of information technology controls over management information systems and the subsequent forecasting ability of the information produced by those systems is investigated. The Sarbanes-Oxley Act of 2002 highlights the importance of information system controls by requiring management and auditors to report on the effectiveness of internal controls over the financial reporting component of the firm's management information systems. We hypothesize and find evidence that management forecasts are less accurate for firms with information technology material weaknesses in their financial reporting system than the forecasts for firms that do not have information technology material weaknesses. In addition, we examine three dimensions of information technology material weaknesses: data processing integrity, system access and security, and system structure and usage. We find that the association with forecast accuracy appears to be strongest for IT control weaknesses most directly related to data processing integrity. Our results support the contention that information technology controls, as a part of the management information system, affect the quality of the information produced by the system. We discuss the complementary nature of our findings to the information and systems quality literature.
This study reexamines the value relevance of e-commerce announcements using an event study methodology. Event studies have become an increasingly popular technique for information systems research by giving researchers a tool to measure the notoriously elusive value of information technology. We find evidence that the traditional event study methodology may not provide an accurate measure of abnormal returns during periods of high market volatility, and propose an alternative methodology. The alternative methodology does not use an estimation period, and takes into account extreme or unusual market movements in the period in which the e-commerce announcement was made. Using the alternative methodology, we find evidence of positive abnormal returns for e-commerce announcements made in the fourth quarter of 1998, but no abnormal returns to e-commerce announcements made in the fourth quarter of 2000. We also find significant differences in value depending on the type of e-commerce initiative. In 2000, e-commerce initiatives with a digital product were valued significantly more than e-commerce initiatives with a tangible product, while in 1998 no such difference existed. In 1998, business-to-business e-commerce initiatives, e-commerce initiatives with a tangible product, and e-commerce initiatives by pure-play Internet firms were valued more than similar initiatives in 2000. The study makes a significant contribution for understanding the value of e-commerce initiatives in highly volatile markets and demonstrates how market values of e-commerce changed from 1998 to 2000. Furthermore, this study shows the importance of carefully considering both the time frame examined and the methodology used when assessing the value relevance of e-commerce initiatives as to avoid inflating the magnitude of any observed effects.
In this paper, we examine the influence of IT strategic role to extend the findings of Im et al. (2001), Chatterjee et al. (2002) and Dos Santos et al. (1993). Specifically, we demonstrate that IT strategic role can explain how IT investments in each of the IT strategic roles might affect the firm's competitive position and ultimately firm value. We find positive, abnormal returns to announcements of IT investments by firms making transformative IT investments, and with membership in industries with transform IT strategic roles. The results of previous research are not found to be significant when IT strategic role is included as an explanatory variable. These results provide support for the value of capturing the IT strategic role of a firm's IT-related competitive maneuvering in studies striving to understand the conditions under which IT investments are likely to produce out-of-the-ordinary, positive returns.
In this paper, the authors propose that firms signal their intention to get serious about managing their information technology (IT) capability by announcing that they have created and filed a new chief information officer (CIO) position. These announcements, one might argue, let shareholders know that the firm intends to take its IT capabilities up a notch; for example, to improve the firm's ability to deliver high quality, low cost IT services, to manage relationships among providers and consumers of technology, to align business and technology strategies and tactics, or to do all of these things. Accordingly shareholders should put a higher value on the firm's common stock. We hope you will not miss the bottom line of the paper: it does not seem seem to make a difference whether the new CIO is an internal or external hire. What matters is that the firm has signaled an intention to invest in its capability to manage and deploy IT.