The Relationship between Board-Level Technology Committees and Reported Security Breaches

45 Pages Posted: 10 Sep 2018

See all articles by Julia L. Higgs

Julia L. Higgs

Florida Atlantic University - School of Accounting

Robert E. Pinsker

Florida Atlantic University

Thomas Joseph Smith

University of South Florida

George Young

Independent

Date Written: January 23, 2016

Abstract

After several high-profile data security breaches (e.g., Target Corporation, Michaels, Home Depot), corporate boards are prioritizing oversight of Information Technology (IT) risk. Firms are also increasingly faced with disclosure decisions regarding IT security breaches. This study proposes that firms can use the creation of a board-level technology committee as part of the firm’s information technology governance (ITG) to signal the firm’s ability to detect and respond to security breaches. Using reported security breaches during the time period 2005-2014, results indicate that firms with technology committees are more likely to have reported breaches in a given year than are firms without the committee. Further analysis suggests that this positive association is driven by relatively young technology committees and external source breaches. Specifically, as a technology committee becomes more established, its firm is not as likely to be breached. To obtain further evidence on the perceived value of a technology committee, this study uses a returns analysis and finds that the presence of a technology committee mitigates the negative abnormal stock returns arising from external breaches. Findings add to the evolving ITG literature, as well to the signaling theory and disclosure literatures.

Keywords: governance, breach, disclosure, technology committee, security

Suggested Citation

Higgs, Julia L. and Pinsker, Robert E. and Smith, Thomas Joseph and Young, George, The Relationship between Board-Level Technology Committees and Reported Security Breaches (January 23, 2016). Journal of Information Systems, Vol. 30, No. 3, 2016. Available at SSRN: https://ssrn.com/abstract=3234337

Julia L. Higgs

Florida Atlantic University - School of Accounting ( email )

University Tower
220 SE 2 Avenue
Fort Lauderdale, FL 33301
United States

Robert E. Pinsker

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

Thomas Joseph Smith (Contact Author)

University of South Florida ( email )

4202 E. Fowler Avenue, BSN 3403
Tampa, FL 33620-5500
United States

George Young

Independent ( email )

No Address Available

Register to save articles to
your library

Register

Paper statistics

Downloads
16
Abstract Views
452
PlumX Metrics