The Impact of Information Technology Internal Controls on Firm Performance

Authors:
Lemuria D. Carter;Brandis Phillips;Porche Millington
Affiliations:
North Carolina A&T State University, USA;North Carolina A&T State University, USA;North Carolina A&T State University, USA
Venue:
Journal of Organizational and End User Computing
Year:
2012

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Abstract

Since the introduction of the Sarbanes-Oxley SOX Act in 2002, companies have begun to place more emphasis on information technology IT internal controls. IT internal controls are policies that provide assurance that technical systems operate as intended, provide reliable data, and comply with regulations. Research suggests that firms with strong internal controls perform better than those with internal control weaknesses. In this study, the authors evaluate the impact of IT internal controls on firm performance. The sample includes 72 publicly traded firms, 36 that reported IT internal control weaknesses and 36 that did not. The results of ordinary least squares OLS regression indicate that substantive IT internal control weaknesses negatively impact firm performance. Results and implications for research and practice are discussed.