International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

The Impact of Information Technology Material Weakness on Corporate Governance Changes in Family-Owned Businesses
Delroy A. Chevers, Jacqueline E. Chevers

Research has demonstrated that information technology (IT) has a direct effect on corporate governance and also that IT is a driver of firms’ performance. As a result, firms have been making huge investments in IT, especially in the area of internal controls in an attempt to promote good corporate governance. However, it is believed that many executives are not placing sufficient attention to the critical role played by IT, especially with respect to internal control material weaknesses. This has led to numerous incidences of financial mis-statements and collapse of organizations in both developed and developing countries. However, firms in developing countries usually have weak governance structures, especially family-owned businesses (FOBs). They are characterized as having less capacity to re-bounce from such incidences and as such, need to strengthen their governance structure in an attempt to achieve good performance. Hence, the purpose of this study is to develop a research model to assess the impact of IT material weakness on corporate governance changes in family-owned versus non-family businesses (NFBs) in a developing country context. It is hoped that the findings will encourage business executives to incorporate IT as a means of internal control in an attempt to achieve good corporate governance which can improve firms’ performance.

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