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Enterprise Resource Planning Systems and Firm Performance: The Role of CEO and Other Implementation Characteristics
Husain Yousef Alyousef,
Kuwait University
Li - Chin Jennifer Ho, University of Texas at Arlington
Jeffrey Tsay, University of Texas at Arlington
ABSTRACT. The main purpose of this study is to provide evidence on how top management characteristics are linked to the financial performance of ERP firms. Two top management characteristics are examined: CEO ownership and CEO horizon. We find that CEO equity holdings are significantly and positively associated with metrics of improved financial performance of ERP adopters. This finding is consistent with the agency theory that aligning CEOs’ wealth with the shareholders’ by increasing the CEOs’ equity holdings will reduce agency costs and improve firm performance. We also find support for the association between CEO horizon and improved financial performance of ERP adopters. This finding suggests that longer-horizon (i.e., younger) CEOs may take stronger interest in or be more capable of ensuring a successful ERP implementation.
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