Firm Sustainability Through ICT Investment, ICT Governance and Board Diversity of ICT Expertise (S/O 13739)

• Main Authors: Kamardin, Hasnah, Abdul Latif, Rohaida, Ahmi, Aidi
• Format: Monograph
• Language: English
• Published: UUM 2021
• Subjects: T Technology (General)
• Online Access: https://repo.uum.edu.my/id/eprint/30164/1/13739.pdf; https://repo.uum.edu.my/id/eprint/30164/

The objectives of the study are threefolds: first is to examine the extent of ICT investment in Malaysian technology–based sector; second is to examine the effect of ICT investment on firm performance; and third is to examine the effect of ICT governance adoption and board diversity (competency) on the firm performance. The board competency includes board’s ICT educational background, ICT professional qualification, ICT industrial experience, and ICT-related training. Sample of the study consists of 37 companies from Malaysian technology based sector listed on Bursa Malaysia for the period of 2010 to 2014 which lead to 185 total firms’ observations. The Malaysian technology-based sector was selected as the sample of the study because firms linked to the technology-based sector are closely engaged in ICT. We use One-way ANOVA to analyse the extent of ICT investment in Technology sector compared to Finance sector and Trading sector. Regression analysis based on Panel Corrected Standard Errors (PCSE) and the dynamic panel data of GMM (DGMM) and systematic panel data of GMM (SGMM) are used to examine the effect of ICT governance, board competency and ICT investment with firm performance (proxied by ROA and Tobin’s Q (TQ)). Findings on the extent of ICT investment show that comparatively ICT investment in Technology sector is less than ICT investment in Finance sector. Finance sector has the largest ICT investment. Generally, the findings also indicate the increasing trend in ICT investment especially in Finance sector and Trading sector. Findings on ICT investment (current and lagged ICT investment) and firm performance show that lagged ICT investment (t-1) are significant and negatively related to ROA. Findings on TQ indicate positive and significant relationship between ICT investment (current and lagged t-1 and t-2). Market foresees the benefits of ICT investment in future performance up to lagged two year of ICT investment. Findings on the effect of ICT governance and board competency in ICT indicate that board with ICT training provides significant competency in assisting the board in ICT related decisons. Both market and ROA perceive the importance of board with industry experience. We also find that the market perceives differently the role of ICT governance and board’s ICT competency on firm performance. Market perceives positively the ICT competency of the senior management but not the ICT educational background and ICT professional competency. However, board of directors with ICT education and ICT professional qualification are significantly related to ROA. In general, results of the study support the board competency in ICT, whether in the form of ICT educational background, ICT professional qualification or ICT industry experience.