The Role of Peer Events in Corporate Governance Evidence from Data Breaches

• 成果类型: Article
• 署名作者: Ashraf, Musaib
• 署名单位: Michigan State University; Michigan State University's Broad College of Business
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2019-1033
• 发表日期: 2022
• 页码: 1-24
• 关键词: internal control deficiencies; INFORMATION; FIRMS; disclosure; IMPACT; determinants; RISK; weaknesses; contagion; QUALITY

摘要

Economic theory suggests that negative peer events can result in market-wide spillovers that help unaffected firms take real actions to enhance corporate governance. Motivated by the SEC's concern about cybersecurity, I study the role of peer events in corporate governance using the setting of data breaches. While controlling for firm-specific time-varying unobservable characteristics, I find that peer data breaches are associated with a reduction in future internal control material weaknesses for non-breached firms. The association is robust to a changes analysis and varies cross-sectionally with breach, firm, and board characteristics. Inferences remain consistent when studying IT-related material weaknesses only. Finally, non-breached firms are more likely to have a cybersecurity expert on the top management team after a peer breach. My findings have important implications for mandatory disclosure regulation in general and, in particular, suggest that regulators can help reduce market-wide exposure to cyber risk by facilitating disclosure of cyber incidents.