HCBE Faculty Articles
Title
Cybersecurity Breach at a Big 4 Accounting Firm: Effects on Auditor Reputation
Document Type
Article
Publication Date
6-1-2023
Publication Title
The Journal of Information Systems
ISSN or ISBN
0888-7985
Volume
37
Issue/Number
2
First Page
77
Last Page
100
Abstract/Excerpt
Public company investors rely on the Big 4 audit firms to provide assurance over internal controls and financial reporting. What, then, would happen if one of these very assurance providers suffered its own cybersecurity breach? We examine such an event in the major data breach of Deloitte in 2017. Using U.S. data from 2014 to 2019, we find Deloitte suffered significant reputational damage postbreach. Specifically, audit clients and existing shareholders became less likely to approve of Deloitte as the company’s auditor. Deloitte also charged lower audit fees after the incident. Furthermore, Deloitte’s audit clients suffered significant negative market reactions postbreach. Our results suggest pervasive implications of cyberattacks on auditor reputation and support recent congressional efforts to expand regulation in this area.
DOI
10.2308/ISYS-2022-006
ORCID ID
0000-0001-7901-7339, 0000-0003-2288-8728,
NSUWorks Citation
Litt, Barri; Tanyi, Paul; and Weidenmier Watson, Marcia, "Cybersecurity Breach at a Big 4 Accounting Firm: Effects on Auditor Reputation" (2023). HCBE Faculty Articles. 1174.
https://nsuworks.nova.edu/hcbe_facarticles/1174
