Cybersecurity isn’t just a safeguard — it helps businesses perform better

Source Domain: www.binghamton.edu

The infamous Target data breach during the 2013 holiday shopping season, which cost the company more than $200 million in damages, has since been hailed as a landmark case in cybersecurity.

Exposure to these threats has only increased as businesses continue to expand their digital footprints. That’s why, as a new study involving Binghamton University’s School of Management found, businesses that sufficiently prepare to defend against cyberattacks are also more likely to perform better financially.

The study, part of an ongoing project, showed that investors value cybersecurity as a critical aspect of a firm’s risk management initiatives and its overall business strategy, describing it not only as a defensive mechanism but a key driver of financial performance.

“If a company has been affected by a cyberattack and ignores it or doesn’t make it clear they’re taking appropriate steps to deal with the problem, that will diminish customer trust and send a bad signal to shareholders, so the readiness and continuous investment are very important,” said Thi Tran, assistant professor in the School of Management, who co-authored the study. “We found that if the firms are more open about the situation and make it known they are attempting to do something about it, that will increase stakeholder trust and the firm will perform better.”

Researchers tested their theory by compiling data from conference calls held by most of the top-tier U.S. public companies from 2000 to 2023. They developed an algorithm that searched transcripts of those calls using a laundry list of cybersecurity-related keywords to detect whenever the subject was mentioned.

Tran said conference calls were used for the study because they offer a more accessible medium for investors to understand this type of information than studying the company’s cybersecurity risk disclosure documents.

By examining those conference call transcripts, researchers were able to gauge how…

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