Contemporary Accounting Research 2026

Auditors' Response to Clients' Cyber Breaches: A Human‐Capital Perspective

Bing Li¹; Yifu Li²; Jeffrey Pittman^3,4; Wenfeng Wang⁵

¹ Department of Accountancy City University of Hong Kong Kowloon Hong Kong · ² Department of Accounting Renmin University of China Beijing China · ³ Faculty of Business Administration Memorial University St. John's Newfoundland and Labrador Canada · ⁴ Department of Accounting and Information Systems Virginia Tech Blacksburg Virginia USA · ⁵ Department of Accounting Southern University of Science and Technology Shenzhen China

Abstract

Using online job postings data, we explore whether auditors adjust their human capital in response to clients' cyber breach incidents. We find that audit offices increase their demand for cybersecurity specialists after their clients' cyber breaches, implying that cyber breaches change not only client risk but also their auditor's production function. Consistent with expectations, we document that this impact is larger when breaches involve their own clients (rather than those of peer offices within the same audit firm) and when breaches directly involve financial information. Our evidence holds for both cyber‐focused and non‐cyber‐focused offices, highlighting the broad impact of cybersecurity risks on audit practices. Additionally, we find that audit offices with relatively high investment in cybersecurity human capital are better able to preserve their market share among clients in high‐cyber‐risk industries after a client's cyber breach.

DOI

10.1111/1911-3846.70092

Language

en

Sources

openalex crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓