IT investments disclosure, information quality, and factors influencing managers' choices

Authors:
Joung W. Kim;Jee-Hae Lim
Affiliations:
H. Wayne Huizenga School of Business and Entrepreneurship, Nova Southeastern University, Davie, FL 33314, USA;School of Accounting and Finance, University of Waterloo Waterloo, ON N2L 3G1, Canada
Venue:
Information and Management
Year:
2011

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Abstract

We explored how IT disclosure affects information quality in the market and identified the factors that influence managers' choices in IT disclosure quality. Adopting a comprehensive view of IT investments disclosure mechanisms, we found that IT disclosure quality was positively associated with information quality. Specifically, our results showed that an increase in quantitative information in IT disclosure could improve the information environment in the market, thereby reducing the perception of information risk among market participants. We also found that managers' disclosures were less quantitative when the IT investment was more asset-specific in relation to higher agency costs.