Is There a Relationship between Firm Performance, Corporate Governance, and a Firm's Decision to Form a Technology Committee?


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Some S&P 500 firms have recently formed technology committees at the board-level. This study investigates the corporate governance and firm financial performance implications of the voluntary formation of technology committees by members of the S&P 500. Using financial performance and structure-related variables, the results of the study suggest that firms’ corporate governance ratings are significantly and positively related to their decisions to voluntarily form technology committees. Specifically, firm performance ratios such as return on assets, return on equity, and net profit margin appear to be associated with firms’ decisions to form board-level technology committees. These findings have post Sarbanes-Oxley corporate governance and performance implications and should be relevant for stakeholders such as the SEC, various stock exchanges, and the firms themselves.