The Impact of Cyber Governance Quality on Dividend Policy in Mitigating Cybersecurity Breaches

Abstract

This study investigates the relationship between cyber risks and dividend policy, as well as how boards, as a governance mechanism, affect the dividend policy under cyber risk. This study collected firm-level financing, corporate governance, and control variables from the Bloomberg database during the period 2013–2022. This paper measures of cyber risk through publicly available corporate disclosures on Form 10-K. The findings confirmed that cyber risks significantly impact dividend policy by posing challenges to corporate technical communication and financial transparency. Effective boards play a critical role in guiding companies toward governance strategies that enhance dividend policy and improve cybersecurity. This study involves policy and practical implications, where research findings suggest the need to strengthen regulatory frameworks that encourage the adoption of strong governance practices and advanced cybersecurity practices within companies. On the practical level, companies should adopt a proactive approach to managing cyber risks by enhancing investments in this area and developing flexible dividend policies.