Firm accounting for IT investment and IT paradox

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Information Technology (IT) Investment has been adopted widely by today organization. Along with the development and new discovery of the technology in IT, the investments have been evolved in variety of form from purchasing a personal computer to large scale of systems. The study on the value getting from IT investment has also been evolving for more than decades. They can be seen in using simple statistical inference to complex concept such as complementary and resource base view. Even different method developed in ITBV field, the common objective the research in this fields are accurately understand the value of IT investment and how the value can be driven. Achieving these objectives are not without difficulty. One of the main groups of problem has been discussed so far are the “IT paradox”. This term was created when different lead researchers in the past found the negative relationship between IT and firm performance. For more than decade till now, the inconsistency of the return from IT investment are still exists. One of the problem discussed as the root factor lead to IT paradox is the input problem (data and variable construct for researches). There is the inconsistency in researchers and practitioner measured how much firm spend on IT. Rarely, researches in ITBV have study deeper how IT investment is measured. This study is attempting to dig deeper into this problem from the accounting angle. In common sense of accounting practitioner, financial accounting is considered as a main function in the organization to record, classify and reporting all the financial data resulting from business transaction in the organization. Since organization need to spend money on IT investment, all the data, how much firm spend on IT shall be reflected in the financial data from financial accounting. At the end of each financial period, firms who are trading in Australian Stock Exchange required to publish the annual report. Surprisingly, from the preliminary finding at the previous stage of this study, only 8% of 2,224 firms in ASX found to report IT investment. Unreported IT simply just can be explained by stating that they do not exist. But this is contrast to the booming period of IT. If we go deeper into this problem, different issues could be found. At the current state of researches, we attempt to understand the factors that could cause the inconsistency in reporting IT. Those factors are the classification, definition, capitalization and reporting of IT investment. The other concepts are the materiality and voluntarily disclosure in financial reporting. The materiality and voluntary disclosure are also related the study to look the unreported IT due to the problem in IT management. Thus, we attempt to address different factors in regard to how firm measure and report IT in order to solve the IT paradox. In order to solve the research problem, the study collects the data from financial report published by firm trading in Australian Stock Exchanges. We attempt to collect the data for 5 year periods from 2006 to 2010. The main data source is Finanalysis.com. Currently, there are 2298 firms listing in ASX. Currently, the study is in process of collecting the data.