Market Price Effects of Data Security Breaches

Morse, Edward A.; Raval, Vasant; Wingender, JohnR.

doi:10.1080/19393555.2011.611860

Cited by 28 publications

(18 citation statements)

References 10 publications

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“…Although companies may under-report, or refuse to report, the financial impact of a security breach, observational research and event studies find that impacted companies experience an immediate drop of 5.6 per cent in stock shares. Further, companies can experience financial loss between $17 and $28m per incident (Garg et al, 2003;Morse et al, 2011). These incidents have also been found to lower consumer trust and intentions of shopping online, especially among older adults (Chakraborty et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

Consumer security behaviors and trust following a data breach

Curtis

Carré

Jones

2018

MAJ

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Purpose The purpose of this study was to determine how security statement certainty (overconfident, underconfident and realistic) and behavioral intentions of potential consumers impact the perceptions of companies in the presence or absence of a past security breach. Design/methodology/approach The study exposed participants to three types of security statements and randomly assigned them to the presence or absence of a previous breach. Participants then evaluated the company and generated a hypothetical password for that company. Findings This study found that the presence or absence of a previous breach had a large impact on company perceptions, but a minimal impact on behavioral intentions to be personally more secure. Research limitations/implications The authors found that the presence or absence of a previous breach had a large impact on company perceptions, but minimal impact on behavioral intentions to be personally more secure. Practical implications Companies need to be cautious about how much confidence they convey to consumers. Companies should not rely on consumers engaging in secure online practices, even following a breach. Social implications Companies need to communicate personal security behaviors to consumers in a way that still instills confidence in the company but encourages personal responsibility. Originality/value The confidence of company security statements and presence of a previous breach were examined for their impact on company perception and a novel dependent variable of password complexity.

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Section: Introductionmentioning

confidence: 99%

Consumer security behaviors and trust following a data breach

Curtis

Carré

Jones

2018

MAJ

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“…Malhotra and Kubowicz Malhotra (2011) show that firms in the financial industry appear to have more negative market reactions to data breaches than in other industries and conjecture that financial firms are held to a higher standard to protect consumer information. Morse et al (2011) conclude that financial and industrial firms have more negative market reactions compared to retailers. Das et al (2012) reject the hypothesis that information security breaches cause larger negative reactions for financial firms than for other types of firms.…”

Section: Firm and Industry Characteristicsmentioning

confidence: 88%

Time-varying effects of cyberattacks on firm value

McShane

Nguyen

2020

Geneva Pap Risk Insur Issues Pract

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This paper adds to research on the effect of cyber events on the attacked firm's value in light of conflicting results from previous studies. Using 536 cyberattack announcements that occurred during the 2007-2016 period, the main goal is to investigate for changes in investor reaction over time as cyberattacks have become more frequent. Empirical evidence shows that cumulative abnormal returns of attacked firms were volatile earlier in the period, became increasingly negative, but have moderated recently. This paper proposes and discusses potential explanations for this observed U-shaped pattern over the 10-year period. The relation between stock market reaction and type of attack, type of data affected, type of perpetrator and various firm level characteristics is also examined.

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“…Compared with the substantial number of studies examining the impact of cybersecurity breaches on shareholder value in the short‐run, less attention has been devoted to their effect on firm long‐term performance (Kamiya et al, 2020; Ko & Dorantes, 2006; Lending et al, 2018; McShane & Nguyen, 2020; Morse et al, 2011). In general, there is some agreement among the mentioned papers that cyberattacks incur additional costs for targeted firms, which lowers their long‐term performance on average.…”

Section: Literature Review: By Steps Of the Risk Management Processmentioning

confidence: 99%

Cyber risk management: History and future research directions

McShane

Eling

Nguyen

2021

Risk Manage Insurance Review

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Cybersecurity research started in the late 1960s and has continuously evolved under different names such as computer security and information security. This article briefly covers that history but will especially focus on the latest incarnation known as "cyber risk management," which includes both technical and economic/management dimensions. The main focus of the article is to review research on individual steps of the cyber risk management process and on the overall process to highlight gaps and determine research directions. Two main findings are that cyber risk is difficult to include in the overall enterprise risk management process and that a move toward cyber resilience is necessary to deal with such a complex risk. Both findings require a level of interdisciplinary collaboration that is currently lacking.

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Market Price Effects of Data Security Breaches

Cited by 28 publications

References 10 publications

Consumer security behaviors and trust following a data breach

Consumer security behaviors and trust following a data breach

Time-varying effects of cyberattacks on firm value

Cyber risk management: History and future research directions

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