Sustainable finance in cybersecurity investment for future profitability under uncertainty

ABSTRACT This paper examines the sustainable financing of R&D activities in the cybersecurity industry as a long-term investment to generate future profits and protect societies from the consequences of uncertainty as an essential part of a nation’s security strategy. Since this study utilises a dynamic panel model, the hierarchy of financing sources for R&D activities is determined by controlling for specific fixed effects. The estimator's efficiency is improved by adopting the system Generalised Method of Moments (GMM), which relies on the current interaction of explanatory variables to achieve a future factor of returns using STATA. The study sample extracted from the Orbis database consists of 51 cybersecurity leaders in the US and the UK from 2016 to 2020. The findings indicate that cybersecurity leaders use external funds to finance R&D activities to achieve high future returns. Although uncertainty increases significantly in the short run, all other else being equal, average future returns are high.