The Shareholder Perspective on Security Breaches

In a forthcoming paper, we explore the stock prices of companies during the period just before to just after an announcement that they have been hit with a computer breach.  We analyze all available public equity data by breach type and industry from 2005 through 2017 and find that, prior to the announcement of a breach, the mean cumulative abnormal return (CAR) on the target’s shares is typically negative. Moreover, following the breach announcement, the mean CAR is typically positive, often larger than the initial CAR decline.

Counterintuitively, following the breach announcement, an increase in stock price is more likely … Read more