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Cybersecurity data breaches and internal control

Fuzhao Zhou and Jianning Huang

International Review of Financial Analysis, 2024, vol. 93, issue C

Abstract: The present study provides novel evidence of the effects of data breaches on firms' subsequent internal control. We find data breaches to be negatively associated with subsequent disclosure of internal control material weakness (i.e., improved internal control), and CEO dismissal to be an effective mechanism for improving internal control. We further find that data breaches can magnify the accounting expertise effect and attenuate the complexity effect on subsequent internal control, and that firms are less likely to file “Big R” restatements and face litigation subsequent to making improvements in internal control.

Keywords: Accounting expertise; Big R restatement; CEO dismissal; Complexity; Data breaches; Internal control (search for similar items in EconPapers)
JEL-codes: M15 M41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:93:y:2024:i:c:s1057521924001066

DOI: 10.1016/j.irfa.2024.103174

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