Widely publicized events and the demand for director skills: evidence from data breaches
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I examine whether widely publicized data breaches affect firms' preferences for IT skills among new board members. The widely publicized data breaches at Target and Equifax in the prior decade can be construed as events wherein individual firms' IT risk perceptions increased despite firms' actual IT risks remaining unchanged. As a result of the heightened salience of IT risk, I find that firms change their preferences for IT-skilled directors on their boards. I further consider how firms' preferences interact with the limited supply of directors with IT skills. Controlling for many determinants, I find an increase in the probability of a firm selecting a new IT-skilled director following the breach at Target, but no change following Equifax. I show several areas in which the results after Equifax appear to represent a supply constraint of IT-skilled directors. Further, I show that IT-skilled directors appointed after Equifax have lower levels of experience, even as their compensation increases.
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Ph. D.