Three essays on applying emerging technologies in corporate cybersecurity, visual, and critical audit matter disclosures

This dissertation comprises three essays applying emerging technologies to gain deeper insights into corporate cybersecurity risk and disclosures.The first essay employs text mining and web scraping to construct a unique dataset and examines how firms’ cybersecurity risk is influenced by remote work adoption. Leveraging the COVID-19 pandemic, which forced much of the workforce to shift to remote work, this study investigates whether this transition affected cybersecurity risk disclosures and incidents. Analyzing 198 firms that allowed remote work before the pandemic reveals that these firms experienced more cybersecurity incidents and disclosed more cybersecurity risks than firms without remote work arrangements. However, this relationship weakened after the widespread shift to remote work, suggesting its significant impact on firms’ cybersecurity risks.The second essay employs an AI-based tool to examine the use of infographics in the Initial Public Offering (IPO) context, the factors associated with it, and the impact on IPO underpricing. Analyzing a dataset of U.S. IPO firms from 2001 to 2021, this study identifies a steady increase in both the number of firms using infographics and their frequency of use. By investigating their impact on IPO underpricing, the findings suggest that infographics enhance disclosure transparency and reduce information asymmetry, particularly when presenting quantitative financial data. This study provides key insights for regulators, investors, and firms regarding the strategic role of visual content in financial reporting.The third essay introduces a systematic, LLM-based methodology to assess the compliance of Critical Audit Matter (CAM) disclosures with auditing standards. Using GPT-4o, CAM disclosures are evaluated across six key dimensions. Results indicate that about 20% of CAM disclosures do not fully comply with audit standards, though compliance has improved over time. Additionally, firms issuing more non-compliant CAM disclosures are more likely to receive PCAOB inspection reports with CAM deficiency. Results also indicate that their clients’ CAM disclosures are significantly modified and improved after receiving those PCAOB reports. This study introduces a novel method for assessing disclosure quality and provides new insights into how regulatory scrutiny influences audit reporting practices.