‘MTSU On the Record’ decodes research on companies’ cybersecurity, transparency

The impact of cybersecurity breakdowns on a company’s investors was the topic of a recent “MTSU On the Record” radio program.

Dr. Andrea S. Kelton

Host Gina Logue’s interview with Dr. Andrea Seaton Kelton, an associate professor of accounting in MTSU’s Jones College of Business, first aired Jan. 7 on WMOT-FM Roots Radio 89.5 and online at www.wmot.org. You can listen to their conversation above.

Kelton co-authored a paper examining whether companies benefit from voluntarily revealing their levels of cybersecurity to the public before competitors’ databanks are hacked.

The researchers found that, regardless of the level of cybersecurity disclosures these so-called “bystander firms” provide, investors tend to become leery of all such firms after a data breach at even one of them.

It’s called the “contagion effect,” and it happened when hackers stole millions of shoppers’ personal information from retailer Target’s database in 2013.

“Other firms in the retail industry also suffered negative economic impact, even though it was just Target that was breached,” Kelton said.

She noted that the alternate theory of investor reaction, the “competition effect,” posits that investors turn away from a breached company and toward others in the same area of business.

“Investors might look at the other nonbreached firm as advantageous, that they’re going to be better off because one of their competitors is suffering due to this breach,” Kelton said.

The Journal of Information Systems will publish the paper, titled “Do voluntary disclosures mitigate the cybersecurity breach contagion effect?” and co-authored by Robin Pennington of North Carolina State University, in an upcoming edition. An abstract is available at http://aaajournals.org.

The publication is the academic journal of the Accounting Information Systems Section of the American Accounting Association.

To hear previous “MTSU On the Record” programs, visit the searchable “Audio Clips” archives at www.mtsunews.com.

For more information about “MTSU On the Record,” contact Logue at 615-898-5081 or WMOT-FM at 615-898-2800.