The Effect of Remote Workforce on Firms‘ Cybersecurity Risk Disclosures and Incidents

Abstract

The outbreak of the COVID-19 pandemic forced the majority of the workforce to work from home to avoid infection. This sudden shift brought several benefits for firms and their employees, including better work-life balance, flexibility, and, arguably, productivity. However, it also increased firms’ cybersecurity risks. This study investigates whether a remote working environment affects firms’ cybersecurity risk disclosure and incidents. Using 176 firms offering work from home before the pandemic, we find that firms that allowed remote work before the pandemic are more likely to experience cybersecurity incidents and disclose cybersecurity risks in their 10-K filings than other firms, both before and during the pandemic period. However, these associations become weaker during the pandemic period. The findings show the positive associations between remote work and cybersecurity risks.

Keywords: remote working, cybersecurity, cybersecurity disclosure