Abstract
ABSTRACT Using unique data on cyber breaches from the Privacy Rights Clearinghouse for U.S. public firms for 2005–2019, this study explores the effect of cyber breaches on audit delay. Results from Accelerated Failure Time (AFT) and probit regression reveal that cyber breaches are strongly associated with shorter audit delays, indicating little audit effort. This result is robust to endogeneity checks, alternative measures, and heterogeneity tests. We elaborate on this result by finding that internal control quality and cybersecurity governance maturity mediate the effects of cyber breaches on audit delay. Our results provide a comprehensive understanding of the role of cyber breaches in auditor risk, and expand the literature on the determinants of audit effort.
Published Version
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