Boosting IT companies’ performance through corporate governance standards: An empirical analysis

Abstract

Research background: In the process of global economic development, the Information Technology (IT) sector has acquired a vital role. Digital transformation drives economic growth, making IT support essential for the efficient functioning of any state, company, or public institution. The IT industry is not only the primary source of innovation, but has also become a key provider of security in the current geopolitical context marked by unexpected challenges. Governance in IT companies is essential to ensure alignment of technology with business objectives, risk management and regulatory compliance. It contributes to transparency, accountability and cost optimization, thereby ensuring process quality and the long-term sustainability of the organization.

Purpose of the article: The research focuses on the empirical study of the impact of corporate governance on the financial performance of the IT companies in the United States of America (US). The econometric analysis database includes 877 companies over a period of 7 years, from 2016 to 2022. This period is characterized by the mass development of emerging technologies, the increasing capabilities of artificial intelligence and adaptation to global crises—with the most relevant example being the Covid-19 pandemic. In the context of the pandemic, the need for digitalization became imperative, particularly in ensuring continuity in online education, e-commerce, and remote work. These developments underscore the growing importance of IT governance and strategic digital capabilities in shaping resilient, future-ready organizations. This study provides valuable insights into the intersection of corporate governance and organizational performance within the dynamic and rapidly evolving IT industry. By adopting an empirical approach, it goes beyond theoretical models to offer evidence-based analysis on how governance structures and standards can enhance operational efficiency, financial results, and strategic resilience.

Methods: There are estimated multiple linear regression models using unbalanced panel data, with pooled OLS, cross-section random effects, cross-section fixed effects, cross-section, and time fixed effects. The dependent variables are represented by return on assets and return on equity, the independent variables capture the characteristics of the board of directors, while company-specific indicators are used as control variables. For each dependent variable, 24 econometrical models were performed.

Findings & value added: The main findings of the research disclose a positive influence of the remuneration and audit committees, board independence, board gender diversity, liquidity, and company size, while board meetings frequency and indebtedness have a negative impact on the financial performance of the IT companies. The added value of this study lies in its interdisciplinary approach, combining principles of corporate governance with performance metrics specific to the digital economy. The findings have practical implications for executives, investors, and policymakers aiming to foster transparency, accountability, and innovation within technology.

Keywords

corporate governance, financial performance, IT sector, US companies, unbalanced panel data regression

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