Is There a Cost to Privacy Breaches? An Event Study - viewcontent.cgi

  • Acquisti A
  • Friedman A
  • Telang R
  • 6

    Readers

    Mendeley users who have this article in their library.
  • N/A

    Citations

    Citations of this article.

Abstract

While the infosec economics literature has begun to investigate the stock mark et impact of security breaches and vulnerability announcements, little more than anecdotal evidence exists on effects of privacy breaches. In this paper we present the first comprehensive analysis of the impact of a company’s privacy incidents on its market value. We compile a broad data set of instances of exposure of personal information from a failure of some security mechanism (hacking, stolen or lost equipment, poor process, and others) and we present the results of various empirical analyses, including event study analysis. We show that there exists a negative and statistically significant impact of data breaches on a company’s market value on the announcement day for the breach. The cumulative e f fect increases in magnitudes over day following the breach announcement, but then decreases and loses statistical significance. We also present regression analyses that aim at disentangling the e f fects of a number of factors on abnormal stock returns due to reported breaches. Finally, we comment on the differences between the impact of the security breaches already described in the literature, and the privacy breaches described here.

Author-supplied keywords

  • Privacy
  • economics
  • ecurity
  • event studies
  • finance
  • information s

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Authors

  • Alessandro Acquisti

  • Allan Friedman

  • Rahul Telang

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free