The impact of data security on firm value : how do stock markets react to data breach announcements?

• Autor(a) principal: Landmann, Juliane
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/26875
• topic: Data breach; Data security; Information technology security; Event study; Violação de dados; Segurança de dados; Segurança de tecnologia da informação; Estudo de eventos; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

Far too often, data security concerns are not taken as seriously as they should be. This negligent behavior does not seldom result in data breaches with far reaching economic consequences. This paper demonstrates that there is an observable decline in firm value following a data breach announcement, applying an event study methodology to a sample of 366 firms being subject to data breaches between January 2013 to July 2018. Using a onefactor and a three-factor model to estimate abnormal returns, firms experiencing a data breach lost on average about 1.33 percent of equity over a three-day window around the event. For different industries, deviations in the magnitude of negative market reactions are detected. Various company and incident related variables, such as company size and number of customer records exposed are deployed in regression analyses to account for cross-sectional variations in abnormal returns. Profitability has a positive influence on the abnormal returns obtained. Multiple breaches have a negative impact on the abnormal equity returns, however, there is no significant difference in the severity when compared to single breaches. Other factors, namely company size, leverage, magnitude of the breach and type of breach do not have any statistically significant influence on the market reactions observed.