Corporate governance reporting, disclosures, monitoring, and decision-making: The role of Big Data analytics and technological tools

Research Question: Using the lens of agency theory, this study seeks to reveal novel qualitative insights on how different governance actors use big data analytics (BDA) and technological tools for governance purposes. It also investigates whether there are any differences in the use of BDA and technological tools between management and the board of directors (BoDs) and whether there are any barriers to adopting new technological tools at the board and managerial levels.

Research Findings: Based on insights from 40 interviews with senior executives at the board and managerial levels across multiple geographical contexts, we reveal three key findings. First, different perspectives exist on using BDA and technological tools to enhance governance between the BoDs and management. This can lead to conflicts if the BoDs receives information from these tools that management has not shared, which further exacerbates the information asymmetry and the agency problem. Second, our findings suggest a paradox where, on the one hand, excessive use of BDA may allow managers to manipulate data or present biased reports. On the other hand, BDA use can simultaneously enable more informed decisions at the board level, even with unclear data. Lastly, we also develop a typology of factors that underpin the use of BDA at the board and managerial levels.

Theoretical Implications: This study's insights deepen the conversation on the use of BDA and technological tools by providing a conceptual framework of a typology of the benefits and barriers to using BDA at both the board and managerial levels. Second, our findings reveal that some of the traditional agency assumptions of board effective monitoring may be more assumed than demonstrated when it comes to effective uses of BDA and new technology.

Policy Implications: Our study suggests that some directors may not be aware of the potential of BDA and technological tools, and many may not understand how it can benefit them. Our findings also reveal the need to educate BoDs and management to keep up with the latest technological tools.