Abstract
The fourth industrial revolution has provided an impetus for the corporate sector to improve operational efficiencies, cut costs, and increase profitability. However, this has also resulted in a higher cybersecurity risk, especially during the COVID-19 pandemic. The objective of this study is to investigate the moderating effect of board characteristics on cybersecurity risk disclosures and company performance for South African listed companies. A content analysis of the integrated reports published by listed companies on the Johannesburg Stock Exchange (JSE) is performed to evaluate the extent to which cybersecurity risk is disclosed from 2015 to 2021. Pooled Ordinary Least Square (POLS) with a robust standard error approach and Two Stage Least Square (2SLS) techniques are employed to analyse the moderating effect of board characteristics on cybersecurity risk disclosure and company performance. The study finds that cybersecurity risk disclosure has a negative and adverse effect on return on assets and Tobin’s Q. Meanwhile, the study documents that gender and ethnic diversity serve as strong moderators in mitigating the detrimental effects of cybersecurity risk disclosure on the two measures of firm performance. This outcome is consistent and robust across the different methodologies adopted. Policy makers can benefit from this study with regard to mandatory board requirements, in terms of gender and ethnic composition that can be employed to strengthen the cybersecurity mitigation strategies at the company level to promote organisational performance.
2015 "Risk management disclosure: A study on the effect of voluntary risk management disclosure toward firm value" Journal of Applied Accounting Research 163400432
2017 "Gender, ethnic and age diversity of the boards of large Malaysian firms and performance" Abdullah, SN, & Ismail, KNIK (2013). Gender, Ethnic and Age Diversity of the Boards of Large Malaysian Firms and Performance. Jurnal Pengurusan 382740
2020 "ESG disclosure and firm performance before and after IR: The moderating role of governance mechanisms" International Journal of Accounting & Information Management 283429444
2010 "The role of boards of directors in corporate governance: A conceptual framework and survey" Journal of economic literature 48158107
2008 "An organizational approach to comparative corporate governance: Costs, contingencies, and complementarities" Organization science 193475492
2021What is Cybersecurity Risk? https://www.securiwiser.com/blog/what-is-cybersecurity-risk/
2014 "Board Characteristics and Company Performance: Evidence from Nigeria" Journal of Finance and Accounting 238189
10.11648/j.jfa.20140203.17 2021 "The relationship between risk disclosure and firm performance: empirical evidence from Saudi Arabia" The Journal of Asian Finance, Economics, and Business 86255266
2014 "The Measurements of Firm Performance’s Dimensions" Asian Journal of Finance & Accounting 612449
2020 "The effect of board diversity on disclosure and management of greenhouse gas information: evidence from the United Kingdom" Journal of Enterprise Information Management 33615571579
2011 "Gender diversity on boards of directors and business success" Investment Management and Financial Innovations 81-1199209
2022 "Corporate governance and capital structure: Moderating effect of gender diversity" Sage Open 12121582440221082110
2018 "Artificial intelligence and the future of humans" Pew Research Center 101219
2016 "Women on boards, sustainability reporting and firm performance" Sustainability Accounting, Management and Policy Journal 73376401
2022 "Gender diversity in boardroom and its impact on firm performance" Journal of Management and Governance 263735755
2017 "The Impact of Capital Structure on Firm’s Profitability: A Case of Cement Industry of Pakistan" International Journal of Business and Social Science 84140147
2014 "The perceived credibility of forward-looking performance disclosures" Accounting and business research 443227259
2019 "Determinants of firm performance: does ethnic diversity matter?" Empirical Economics 57620792105
2017 "Ethnic diversity and firm performance: Evidence from China’s materials and industrial sectors" Empirical Economics 5317111731
2021 "The sustainability reporting-firm performance nexus: evidence from a threshold model" Journal of Global Responsibility 124491512
2022 "The impact of country institutional factors on firm disclosure: Cybersecurity disclosures in Chinese cross-listed firms" Journal of Accounting and Public Policy 416106998
2021 "The use of artificial intelligence in cybersecurity: A review" IEEE Computer Society2018
"Cybersecurity awareness and market valuations" J. Account. Public Policy 376508526
2015 "Insurability of cyber risk: An empirical analysis" The Geneva Papers on Risk and Insurance—Issues and Practice 401131158 DOI: https://doi.org/10.1057/gpp.2014.19
2020 "The effect of board diversity on firm performance: evidence from Chinese L isted companies" Indian Journal of Corporate Governance 131933
2021 "Board gender diversity and firm performance: The UK evidence" International Journal of Finance & Economics 26457045719
2018 "Does board diversity matter in the disclosure process? An analysis of the association between diversity and the disclosure of information on risks" International Journal of Disclosure and Governance 15104114
2022 "Defining Cyber Security and Cyber Security Risk within a Multidisciplinary Context using Expert Elicitation" Risk Analysis 42816431669
10.1111/risa.13687 2022 "Changes in corporate cybersecurity risk disclosures after SEC comment letters" J. Account. Public Policy 412022106993
2003 "The economic cost of publicly announced information security breaches: empirical evidence from the stock market" Journal of Computer security 113431448
2016 "Women in the boardroom and fraud: Evidence from Australia" Australian Journal of Management 414719734 DOI: https://doi.org/10.1177/0312896215579463
2010 "The Gender and Ethnic Diversity of US Boards and Board Committees and Firm Financial Performance" Corporate Governance and International Review 185396414
10.1111/j.1467-8683.2010.00809.x 2023 "Do women on boards enhance firm performance? Evidence from top Indian companies" International Journal of Disclosure and Governance 202155167
2022 "Talk too much? The Impact of Cybersecurity Disclosures on Investment Decisions" Communications of the Association for Information Systems 5022481500
2014 "Ethnic diversity and firm financial performance: Evidence from Malaysia" Journal of Asia-Pacific Business 15173100
2018 "The impact of board ethnic diversity on firm performance: evidence from public listed firms in Malaysia" International Journal of Monetary Economics and Finance 113260270
2002The governance of public and non-profit organizations 6LondonRoutledge
2022 "Cyber risk and cybersecurity: a systematic review of data availability" The Geneva Papers on risk and insurance-Issues and practice 473698736
1997 "Toward a stewardship theory of management" Acad Manag Rev 221997204710.2307/259223
10.24311/jabes/2013.218.08 2019Business impact of cyber-attacks https://www2.deloitte.com/au/en/pages/media-releases/articles/business-impacts-cyber-attacks.html
1990 "The ethereal hand: organizational economics and management theory" Acad Manag Rev19901536981
10.2307/258013 Jan1020182018 the year of the AI-powered cyberattack https://www.csoonline.com/article/3246196/2018-the-year-of-the-ai-powered-cyberattack.html
2021 "An analysis of cybersecurity in Dutch annual reports of listed companies" Computer Law & Security Review 40105513
2019 "The Impact of Board Characteristics on the Disclosure of the Forward-Looking Information: Evidence from the Egyptian Stock market" Alexandria Journal of Accounting Research 33138
2016 "What do we know about cyber risk and cyber risk insurance?" The Journal of risk Finance 175474491
2022 "Integrated reporting, textual risk disclosure and market value" Corporate Governance: The International Journal of Business in Society 221173193
2003 "Board of director diversity and firm financial performance" Corporate Governance: An International Review 11102111
2012Business Ethics and Corporate GovernanceSecondPearson India
2018 "Corporate Risk Disclosure and Business Performance: Does Board Gender Diversity Matters?"
European Proceedings of Social and Behavioural Sciences 2020 "Public companies’ cybersecurity risk disclosures" International Journal of Accounting Information Systems 382020100468
2017 "Gender diversity in the Italian boardroom and firm financial performance" Management Research Review 4017594
2010 "Market value of voluntary disclosures concerning information security" MIS Quarterly 343567594
2020 "Do board gender quotas affect firm value? Evidence from California Senate Bill No 826" Journal of Corporate finance 60101526
2019 "Does Board Ethnic Diversity Impact Board Monitoring Outcomes?" British Journal of Management 305374
10.1111/1467-8551.12299 2016 "Do women and ethnic minority directors influence firm value? Evidence from post-apartheid South Africa" Journal of Business Finance & Accounting 433-4370413
2019 "Cybersecurity in accounting research" Managerial Auditing Journal 347808834
10.1108/MAJ-09-2018-2004 2020 "The joint effect of corporate risk disclosure and corporate governance on firm value" International Journal of Disclosure and Governance 17123140
1984 "Upper Echelons: The Organisation as a Reflection of its Top Managers" The Academy of Management Review 92193206
2015 "Signaling firm performance through corporate voluntary disclosure" Journal of Applied Business Research (JABR) 312609620
2021 "Board of directors’ composition and social media financial disclosure: the case of the United Arab Emirates" The Big Data-Driven Digital Economy: Artificial and Computational Intelligence229241ChamSpringer International Publishing
2014 "The impact of board diversity and expertise on nonprofit performance" Nonprofit Management and Leadership 252113130
2009 "The value relevance of disclosure: Evidence from the emerging capital market of Egypt" The International Journal of Accounting 44179102
2022 "Board of directors’ attributes and aspects of cybersecurity disclosure" Journal of Management and Governance146
2022Cyber Security In The Wake of Fourth Industrial Revolution: Opportunities and Challenges https://www.frontiersin.org/research-topics/43231/cyber-security-in-the-wake-of-fourth-industrial-revolution-opportunities-and-challenges
2016 "Cyber-risk disclosure: who cares?" Georgetown McDonough School of Business Research Paper2852519
2020 "Sustainability reporting and firm performance: The demonstration of Pakistani firms" SAGE Open 1032158244020953180
2021 "Content Analysis of Voluntary Disclosures on Cybersecurity in Malaysia" International Journal of Academic Research in Accounting Finance and Management Sciences 1141028
2022Cyber Security Treats https://www.imperva.com/learn/application-security/cyber-security-threats/
2008X.1205 Overview of cybersecurity. Series X: Data Networks, Open System Communications and Security – Telecommunication Security https://www.itu.int/rec/T-REC-X.1205-200804-I
1976 "Theory of the firm: Managerial behavior, agency costs and ownership structure" Journal Financial Economics 3305360
2016 "Analysis of Board Size and Firm Performance: Evidence from NSE Companies Using Panel Data Approach" Indian Journal of Corporate Governance 92148172
10.1177/0974686216666456 2013 "Textual risk disclosures and investors’ risk perceptions" Rev. Acc. Stud 18410881122
October102022Cybersecurity risks ‘can no longer’ be ignored: MIT Sloan launches course to teach board members prevention tactics https://fortune.com/education/business/articles/2022/10/10/cybersecurity-risks-can-no-longer-be-ignored-mit-sloan-launches-course-to-teach-board-members-prevention-tactics/
2019 "The synergistic effect of environmental sustainability and corporate reputation on market value added (MVA) in manufacturing firms" International Journal of Production Research 572271237141
2018 "SEC’s cybersecurity disclosure guidance and disclosed cybersecurity risk factors" International Journal of Accounting Information Systems 304055
2022 "The moderating effect of board gender diversity on the relation between corporate social responsibility and firm value" Journal of Management Control 331109143
2020 "Does gender diversity on boards reduce information asymmetry problems?Empirical evidence from the French market" Journal Family Business Management 102144166 DOI: https://doi.org/10.1108/JFBM-02-2019-0007
2022 "Board gender diversity and firm performance: Evidence from Latin America" Journal of Sustainable Finance & Investment 123785808
Mar182022The Biggest Cyber Security Risks In 2022 https://www.forbes.com/sites/bernardmarr/2022/03/18/the-biggest-cyber-security-risks-in-2022/?sh=7ab76efe7d7b
2019 "Integrated Reporting and financial Performance of South African listed banks" Banks and Bank Systems 142128139
2016 "Cooperative social and environmental disclosure and financial performance of savings and credit cooperatives in Kenya" Advances in accounting 35197206
2020 "The Effect of Firm’s Size on Corporate Performance" International Journal of Advanced Computer Science and Applications 115272277
2014 "Narrative disclosure and earnings performance: Evidence from R&D disclosures" The Accounting Review 892725757
2009 "Demographic diversity in the boardroom: mediators of the board diversity– firm performance relationship" Journal of Management Studies 46755786
August52022What Is Cybersecurity? Definition, Importance, Threats, and Best Practices https://www.spiceworks.com/it-security/vulnerability-management/articles/what-is-cybersecurity/
2014 "The Association between Economic Value Added, Market Value Added and Leverage" International Journal of Business and Management 910126133
2023 "Does Institutional Quality Matter in the Financial Development-Economic Complexity Nexus? Empirical Insights from Africa" Research in Globalization100173
2023 "Board gender diversity and firm performance: A complexity theory perspective" Asia Pacific Journal of Management 40312891320
2016 "Environmental and social disclosures: Link with corporate financial performance" The British Accounting Review 481102116
2007 "Nationality and gender diversity on Swiss corporate boards" Corporate Governance: An International Review 154546557 DOI: https://doi.org/10.1111/j.1467-8683.2007.00587.x
12September2022The impact of low cyber security on the development of poor nations | Experts’ Opinions https://www.developmentaid.org/news-stream/post/149553/low-cyber-security-and-development-of-poor-nations
2019 "Board diversity, corporate governance, corporate performance, and executive pay" International Journal of Finance & Economics 242761786
2018 "The influence of board diversity on company performance of South African companies" Journal of African Business 191105123
2011aCF disclosure https://www.sec.gov/divisions/corpfin/guidance/cfguidance-topic2.htm
2018Commission statement and guidance on public company cybersecurity disclosuresAvailable at: https://www.sec.gov/rules/interp/2018/33-10459.pdf
2019 "Connected and autonomous vehicles: A cyber risk classification framework" Transportation Research Part a: Policy and Practice 124523536 DOI: https://doi.org/10.1016/j.tra.2018.06.033
2023 "Organizational Learning from Cybersecurity Performance: Effects on Cybersecurity Investment Decisions" Information Systems Frontiers112
2021 "Does board gender diversity affect firm performance? Empirical evidence from Standard & Poor’s 500 Information Technology Sector" Financial Innovation 752 DOI: https://doi.org/10.1186/s40854-021-00265-x
2023 "Board effectiveness and cybersecurity disclosure" Journal of Management and Governance 27410491071
2016 "The role of firm characteristics on the relationship between gender diversity and firm performance" Management Decision 54614071419
1973 "Job market signaling" The Quarterly Journal of Economics35574
2018Statement on commission statement and guidance on public company cybersecurity disclosures https://www.sec.gov/news/public-statement/statement-stein-2018-02-21
2020 "Integrating Cybersecurity and Enterprise Risk Management (ERM)" National Institute of Standards and Technology Interagency or Internal Report 8286 DOI: https://doi.org/10.6028/NIST.IR.8286
2019 "Firm Performance: Definition and Measurement Models" European Scientific Journal January 15193106
1September2021Are African countries doing enough to ensure cybersecurity and Internet safety? DOI: https://www.itu.int/hub/2021/09/are-african-countries-doing-enough-to-ensure-cybersecurity-and-internet-safety/
2022 "Does privacy breach affect firm performance? An analysis incorporating event-induced changes and event clustering" Information & Management 598103707
2023 "The relationship between earnings management and integrated reporting quality: Board gender diversity as moderator" Corporate Ownership & Control 2026374 DOI: https://doi.org/10.22495/cocv20i2art5
2013 "Corporate governance and firm performance: Empirical evidence from Vietnam" Journal of Financial Economics 78210226
2012 "What makes age diverse teams effective? Results from a six-year research program" Work 41Suppl 151455151
1980 "A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity" Econometrica 484817838
2012Partnering for cyber resilience https://www3.weforum.org/docs/WEF_IT_PartneringCyberResilience_Guidelines_2012.pdf
