Classifying the Contents of Cybersecurity Risk Disclosure through Textual Analysis and Factor Analysis

2020 ◽  
Author(s):  
Arion Cheong ◽  
Kyunghee Yoon ◽  
Soohyun Cho ◽  
Won Gyun No
Keyword(s):  
Factor Analysis ◽  
Internal Control ◽  
Textual Analysis ◽  
Quantitative Methodology ◽  
Risk Disclosure ◽  
Related Factors ◽  
Negative Effect ◽  
Internal Control Weaknesses ◽  
Risk Disclosures

Cybersecurity has garnered much attention due to the increasing frequency and cost of cybersecurity incidents in recent years and become a significant concern for organizations and governments. Regulators such as the Security and Exchange Commission (SEC) have also shown an interest in cybersecurity and the quality of cybersecurity risk disclosures. This paper examines the informativeness of cybersecurity risk disclosures when cybersecurity incidents or related internal control weaknesses are reported. In particular, we propose a quantitative methodology, which is a combination of textual analysis and factor analysis, for classifying cybersecurity risk disclosures into nine factors. Our results show different disclosing patterns among firms depending on whether they had cybersecurity incidents and internal control weaknesses. Further, our analysis indicates that firms disclose control-related factors to mediate the negative effect of disclosing vulnerability-related factors. This study provides various stakeholders, including investors, regulators, and researchers, with insight into the informativeness of cybersecurity risk disclosures.

scholarly journals Readability of Operational Risk Disclosures of Banks

2019 ◽  
Vol 14 (3) ◽  
pp. 108-116 ◽  
Author(s):  
Mocanu Mihaela ◽  
Grose Christos ◽  
Kargidis Theodoros
Keyword(s):  
Financial Institutions ◽  
Commercial Banks ◽  
Textual Analysis ◽  
Banking System ◽  
Operational Risk ◽  
Risk Disclosure ◽  
Financial Firms ◽  
Risk Disclosures ◽  
Technical Terms

AbstractOperational risk has been acknowledged as a major source of material failures in financial firms. Despite the increased concern of financial institutions and their stakeholders on this topic, the literature that deals specifically with the operational risk disclosure in the banking system is scarce. The present research investigates the readability in transparency reports of Romanian banks, and focuses in particular on the operational risk disclosures. The sample consists of 13 commercial banks operating in Romania in 2017. A concise transparency report is characterized by clarity in the expression of concepts, usage of as few words as possible, limited use of technical terms and avoidance of highly generic disclosures. Drawing upon prior research, we expect that banks with lower levels of performance are foggier (i.e. less concise) in order to improve the image resulting from their transparency reports. Additionally, it is expected that the longer an entity has been established, the higher the quality of disclosures, thus the transparency reports of older banks are more concise compared to the recently established banks. Moreover, we posit that larger banks are more likely to provide more readable reports. The research is part of the larger debate related to disclosure and its various impacts on both the recipient and the giver of information. The main contribution is the innovative approach consisting in the textual analysis of transparency risk reports. To the best of our knowledge, we are not aware of any study that examined conciseness in the setting of operational risk disclosure by banks.

scholarly journals Corporate risk reporting: Analysis of risk disclosures in the interim reports of public Portuguese non-financial companies

2018 ◽  
Vol 63 (2) ◽  
pp. 34
Author(s):  
Rogério Marques Serrasqueiro ◽  
Tânia Sofia Mineiro
Keyword(s):  
Internal Control ◽  
Audit Quality ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Explanatory Variables ◽  
Corporate Reporting ◽  
Financial Scandals ◽  
Risk Disclosures ◽  
Corporate Risk

<p class="Default">Fast changing environments, globalization, coupled with financial scandals, and the advance of in­formation technologies made corporate risk a very central issue in management and accounting. Current governance codes require that management disclose in annual reports its responsibility for the adequacy of risk management and internal control systems and the disclosure of risk and uncertainties faced by companies are required by both governance codes and corporate reporting. This study seeks to capture risk disclosure patterns adopted by public Portuguese companies in interim reports and to investigate whether the audit quality may explain the observed risk disclosures practices. Manual content analysis has been carried out in the interim reports of 35 non-financial Portuguese firms ranked by decreasing mar­ket capitalization to create indexes of corporate risk disclosure, which have been used for observing the tone of disclosure and for testing an explanatory model with proxies of audit quality together with other explanatory variables widely used in disclosure research. Results point out that quantified risk disclosure prevails in interim reports and that firm’s risk disclosure policies are not influenced by auditor’s quality. This work contributes to academic and regulatory environments, filling the gap about risk disclosure in the interim report, identifying the nature of corporate risk disclosures, assessing the quality of risk infor­mation and updating research about determinants of risk disclosure in interim reports.</p>

scholarly journals Risk Disclosure Patterns among Jordanian Companies: An Exploratory Study during Covid-19 Pandemic

2020 ◽  
Vol 9 (3) ◽  
pp. 69
Author(s):  
Fawzi Ata Al-Sawalqa
Keyword(s):  
Board Of Directors ◽  
Exploratory Study ◽  
Critical Time ◽  
Extraction Process ◽  
Risk Disclosure ◽  
Entire Study ◽  
Operational Activities ◽  
Risk Disclosures ◽  
Disclosure Patterns

This current exploratory study comes at a critical time to determine the risk disclosure pattern of Jordanian companies during Covid-19 pandemic in response to the request of JSC for Jordanian listed companies to prepare and send disclosure reports include the effect of Covid-19 pandemic on their activities in terms of material events, operational activities and the decisions of board of directors during the period of disclosure suspension extending from March 18, 2020 to May 5, 2020. Based on all the non-financial companies that listed in the first market, the results of the study indicated that the entire study sample (100%) did send the disclosure reports to JSC. In terms of the quality of disclosed risks, extraction process resulted in finding 20 risk items distributed over 5 categories. The results show that the average disclosure level is 65.6%, with the operational category ranked first and followed by investor relation category, financial category, strategic category and finally the market category. Results show that those sectors that were suspended completely during Covid-19 pandemic provided risk disclosures in all categories and vice versa. In addition to the several implications, the study offers many avenues for future study based on the risk disclosure model of the current study.

scholarly journals Faktor-faktor yang Mempengaruhi Fraud (Studi pada Pemerintah Desa se-Kabupaten Bantul)

2020 ◽  
Vol 2 (1) ◽  
pp. 12-20
Author(s):  
Sri Widodo
Keyword(s):  
Regression Analysis ◽  
Internal Control ◽  
Validity Data ◽  
Purposive Sampling ◽  
Asymmetry Information ◽  
The People ◽  
Negative Effect ◽  
Positive Effect ◽  
Research Show

ABSTRACT: This research is used to know the influence of internal control, asymmetry information, regulation accountancy, and blameable behaviour the wards fraud on village governance in Bantul Regency. This research used purposive sampling as the method to determine sample. There are 75 questionnaires separated and there are 61 questionnaires which the people fill the questionnaires . there are only 59 questionnaires which uses in this research because it includes the criterion given to be used as the data. The data analysus technique used validity data to know the quality  of the data from validity, reliability, and hypothesis includes multiple regression analysis, F-test, t-test and R2 test. The result of the research show  (1) internal control has the negative effect to ward fraud, (2) asymmetry information does not influence the ward fraud, (3) regulation accountancy does not influence to ward fraud (4) blameable behavior has positive effect to ward fraud. Key words: internal control, asymmetri information, regulation accountancy, blameable behavior, fraud   ABSTRAK: Penelitian ini dilakukan untuk mengetahui pengaruh pengendalian internal, asimetri informasi, ketaatan aturan akuntansi, dan perilaku tidak etis terhadap fraud pada Pemerintah Desa se-Kabupaten Bantul. Metode penelitian yang digunakan untuk penentuan sampel yaitu menggunakan metode purposive sampling. Data yang disebar sejumlah 75 kuesioner dan data yang kembali sejumlah 61 kuesioner, namun hanya 59 kuesioner yang memenuhi kriteria yang bisa dilakukan pengolahan data. Teknik analisis data yang digunakan dalam penelitian ini adalah uji kualitas data yang terdiri dari uji validitas dan uji reliabilitas, dan uji hipotesis yang terdiri dari analisis regresi berganda, uji F, uji t, dan uji R2.. hasil penelitian ini menunjukkan bahwa (1) pengendalian internal berpengaruh negatif terhadap fraud (2) asimetri informasi tidak berpengaruh terhadap fraud, (3) ketaatan aturan akuntansi tidak berpengaruh terhadap fraud, (4) perilaku tidak etis berpengaruh positif terhadap fraud. Kata kunci : Pengendalian Internal, Asimetri Informasi, Ketaatan Aturan Akuntansi, dan Perilaku tidak Etis, Kecurangan

The Effect of SOX Internal Control Deficiencies and Their Remediation on Accrual Quality

2008 ◽  
Vol 83 (1) ◽  
pp. 217-250 ◽  
Author(s):  
Hollis Ashbaugh-Skaife ◽  
Daniel W. Collins ◽  
William R. Kinney ◽  
Ryan LaFond
Keyword(s):  
Internal Control ◽  
Strong Evidence ◽  
Control Problems ◽  
Cross Sectional ◽  
Accrual Quality ◽  
Control Quality ◽  
Internal Control Weaknesses ◽  
Abnormal Accruals ◽  
Internal Control Deficiencies

This paper investigates the effect of internal control deficiencies and their remediation on accrual quality. We first document that firms reporting internal control deficiencies have lower quality accruals as measured by accrual noise and absolute abnormal accruals relative to firms not reporting internal control problems. Second, we find that firms that report internal control deficiencies have significantly larger positive and larger negative abnormal accruals relative to control firms. This finding suggests internal control weaknesses are more likely to lead to unintentional errors that add noise to accruals than intentional misstatements that bias earnings upward. Third, we document that firms whose auditors confirm remediation of previously reported internal control deficiencies exhibit an increase in accrual quality relative to firms that do not remediate their control problems. Finally, we find firms that receive different internal control audit opinions in successive years exhibit changes in accrual quality consistent with changes in internal control quality. Collectively, our cross-sectional and intertemporal change tests provide strong evidence that the quality of internal control affects the quality of accruals.

Comparing the Cybersecurity Risk Disclosures of US and Foreign Firms

2021 ◽  
Author(s):  
Thomas Calderon ◽  
Lei Gao
Keyword(s):  
Key Words ◽  
Textual Analysis ◽  
Home Bias ◽  
Foreign Firms ◽  
Risk Disclosure ◽  
Disclosure Regulation ◽  
The Us ◽  
Risk Disclosures

This study explores the cybersecurity risk disclosure differences between foreign firms listed in the US and US firms. We first extract cybersecurity risks disclosures text with a Python program based on a list of cybersecurity key words. We then perform textual analysis of the cybersecurity risk disclosures in foreign firms’ 20-F filings and US firms’ 10-K filings. During our study period, we observe that foreign firms disclose more about their cybersecurity risks and their disclosures are more readable than US firms. Foreign firms also use more numbers, fewer uncertainty words and fewer litigious language than their US counterparts.  In general, our study suggests that cybersecurity risk disclosures made by foreign firms are clearer and more specific than those made by US firms. This finding could have implications for disclosure regulation and home bias research.

scholarly journals Corporate Governance and Risk Disclosures: A Comparative Analysis Between Bangladeshi and Malaysian Islamic Banks

2019 ◽  
Vol 10 (5) ◽  
pp. 110
Author(s):  
Mohammad Rokibul Kabir ◽  
Farid A. Sobhani ◽  
Normah Omar ◽  
Norazida Mohamad
Keyword(s):  
Corporate Governance ◽  
Profit Sharing ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Risk Disclosure ◽  
Corporate Governance Mechanisms ◽  
Analysis Technique ◽  
Risk Disclosures

Corporate governance provides a fundamental framework to oversee corporate conduct and ensures transparency of institutions like banks. In case of Islamic banks, it adds additional importance as the profit sharing (with the depositors) system enhances the chance of agency problem for such institutions. Again, risks are inherent in institutions like Islamic banks, which necessitate the investors to get proper information about the risk encountered by the banks in which they invest. Thus, corporate governance and risk disclosures bear utmost importance. Since Malaysian banking industry has already experienced a favorable growth of Islamic banking and Bangladesh is observing a rapid growth of popularity of Islamic banking, a comparative study has been undertaken between Malaysian and Bangladeshi Islamic banks regarding corporate governance and risk disclosures in annual reports. Content analysis technique has been applied to facilitate the comparison. Both quantity and quality of risk reporting of the sample companies have been evaluated. A corporate governance disclosure index has been developed by following the guidelines provided by Bangladesh Security and Exchange Commission (BSEC) and the principles laid down in the ‘Guidelines on Corporate Governance for Licensed Islamic Banks in Malaysia’ to explore and compare the degree of good corporate governance and relevant disclosures in the annual reports. It is hypothesized that corporate governance and risk disclosure will vary between Malaysian and Bangladeshi Islamic Banks. It is also argued that the corporate risk disclosures will be positively associated with the quality of the firm’s corporate governance mechanisms. Results are generally supportive of hypotheses. At the end, implications for theory and practices are discussed in the study.

Directors' and Officers' Legal Liability Insurance and Internal Control Weaknesses

2018 ◽  
Vol 17 (1) ◽  
pp. 69-86 ◽  
Author(s):  
Guang-Zheng Chen ◽  
Edmund C. Keung
Keyword(s):  
Internal Control ◽  
Legal Liability ◽  
Internal Controls ◽  
Liability Insurance ◽  
Listed Firms ◽  
Additional Information ◽  
Internal Control Weaknesses ◽  
Directors And Officers ◽  
Personal Liability

ABSTRACT Directors' and officers' (D&O) legal liability insurance releases directors and officers from the threat of litigation and personal liability stemming from their decisions on behalf of the corporation. While researchers have examined some of the determinants of internal control weaknesses, it is not clear whether excess D&O coverage motivates managers to weaken the quality of firms' internal controls. This study examines whether excess D&O coverage affects the effectiveness of internal controls. Based on a sample of Taiwanese listed firms for the period 2008 to 2012, we find that firms with excess D&O coverage exhibit a greater likelihood of internal control weaknesses. This finding is driven primarily by company-level weaknesses rather than by account-level weaknesses. Because the disclosure of D&O insurance may convey additional information about managers' actions, our findings have implications for other emerging markets.

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