Understanding the Association between IT Governance Maturity and IT Governance Disclosure

Understanding the Association between IT Governance Maturity and IT Governance Disclosure

Stefan Bünten (Generali Deutschland Informatik Services GmbH, Aachen, Germany), Anant Joshi (Department of Organization and Strategy, Maastricht University, Maastricht, Netherlands), Steven De Haes (Antwerp Management School,University of Antwerp, Antwerp, Belgium) and Wim Van Grembergen (Antwerp Management School, University of Antwerp, Antwerp, Belgium)
Copyright: © 2014 |Pages: 18
DOI: 10.4018/ijitbag.2014010102
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IT governance (ITG) provides a toolbox for companies to realize maximum value from IT. Firms implement ITG via frameworks, such as COBIT or VALIT, which list processes to align business and IT strategies, deliver IT services and comply with regulations. While there exists evidence that companies with mature ITG processes outperform their competitors and that signaling ITG maturity to external stakeholders has a positive impact on firm value, little research has focused on the relationship between IT governance maturity and disclosure of related information. This study examines the association of COBIT and VALIT maturity on IT governance disclosure. The authors posit that overall maturity in COBIT and VALIT have a positive impact on IT governance disclosure. Our results indicate that there exists a positive impact for COBIT maturity and most of its domains on disclosure, while the impact of VALIT maturity on disclosure is mostly insignificant.
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1. Introduction

Since the introduction of the personal computer to the business world in the early 1980s, advancements of information technology have produced plenty of opportunities for businesses to increase their efficiency and outperform their competitors(A. S. Bharadwaj, 2000).The major obstacle for organizations to realize these opportunities has been to gather value from IT investments. The concept of IT governance, which has gained momentum in the recent years, offers a potential solution to this problem. It enables firms to gain real value from their IT investments, by providing frameworks, processes and evaluation criteria to manage IT resources (ITGI, 2003). Weill & Ross (2004) showed that there exists a relationship between effective IT governance and superior firm performance. Acknowledging that communication of IT related information is relevant to external stakeholders, still many firms fail to signal their IT governance maturity to external stakeholders (Joshi, Bollen, & Hassink, 2013). As a result, firms might forgo opportunities to retain stakeholder confidence and improve firm value.

In this study, we investigate the relationship between IT governance maturity and IT governance disclosure1. Specifically, we examine the association of COBIT and VALIT frameworks to the disclosure of different types of IT governance related information. Our univariate analysis suggests that firms with a higher level of COBIT maturity are associated with higher disclosure on IT governance. We do not find any association between implementation of VALIT and IT governance disclosure. This study makes three contributions to the body of IT governance literature. First, it adds to the general understanding of the relationship between IT governance maturity and disclosure of associated information. Understanding the mechanisms behind this relationship helps researchers, managers and external stakeholders to evaluate governance maturity of firms without having access to classified information. Second, more specifically it enriches our knowledge concerning the impact COBIT and VALIT exercise on disclosure of governance related information. Third, it adds to the existing literature on IT governance, which in turn might help to bring new insights to the topic such as IT governance disclosure.

The remainder of the paper is organized as follows: Section 2 provides a review of prior literature and the research question. Section 3presents the research design, sample collection and data analysis approach. The results and discussion are presented in Section 4. Finally, Section 5 contains a summary of our results, mentions limitations of the study and lists suggestions for future research.

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