Economics and Accounting Honors Theses

Date of Creation

4-5-2019

Degree Type

Departmental Honors Thesis - Restricted Access

First Advisor

Professor Karen Teitel

Abstract

This study conducts first an OLS regression to study how stock prices of public companies in the U.S. react to data breach announcements, and subsequently, a cross-section analysis to study how different breach and firm characteristics might affect the magnitude and direction of the impact. This study includes an additional variable, “timing”, into the existing pool of firm characteristics, which measures the timing difference between breach start date and breach disclosure date. This study includes breach events from 2008 to July of 2018, a wider and more recent time period than existing studies. It is found that the overall impact of data breach announcements around disclosure date on companies’ stock prices is not significantly different from zero. The timing difference is not significant, due to the lack of sufficient disclosure of breach events. However, it is found that the size of the breached firms negatively impacts companies’ stock reactions, as well as when the breached data involved electronic user login information. It is also found that a repeated breach event somehow has a positive impact on breached firms’ stock price change from data breach disclosure.

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