| dc.description.abstract | This study investigates the effect of a data breach with more than 30 000 records stolen on
publicly US listed companies' share price. Utilizing the market model, we examine abnormal
returns after an announcement of a data breach in the period between 2010 and 2019. Further,
the study focuses exclusively on data breaches that either was officially confirmed by the
targeted company through a press release, statements to the media or confirmed through
independent media reports. We find a negative and statistically significant average reduction
in the share price on the day of and following the announcement of a data breach. The
cumulative effect of a data breach on the share price stabilizes at day six in the event window
after the announcement of the data breach. Our findings are consistent over the analyzed event
windows, indicating a negative abnormal return following a data breach. Furthermore, we find
a considerable variance in the reduction in share price within the sample. Hence, we are
looking closer into the heterogeneity of the data breaches. First, we investigate the differences
between industries and find that the finance industry experiences the most severe decline.
Secondly, in line with the increased media attention we explore the average market reaction
of a data breach in the two periods 2010 to 2014 and 2015 to 2019. Our findings indicate a
greater reduction in the market value in the period 2015 to 2019. Furthermore, we run a
regression that accounts for firm-specific traits and variables that attempt to capture the
individual data breaches' characteristics. The regression finds that the data sensitivity, number
of records stolen, customer segment and firm size influence the market reaction. Lastly, a data
breach can have large consequences for the management team as job losses are relatively
common. | en_US |
