Should You Disclose a Data Breach via Social Media? Evidence from US Listed Companies

Date
2018-01-03
Authors
Rosati, Pierangelo
Deeney, Peter
Cummins, Mark
van der Werff, Lisa
Lynn, Theo
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Abstract
Data breaches represent one of the main concerns for executives across all sectors. Data breaches open a period of crisis for the affected firm and require them to disclose complex information to a variety of stakeholders in a timely and proper manner. This paper investigates the relationship between social media disclosure of a data breach and its cost, as proxied by the response of the affected firm’s stock price. Using an event study methodology on a sample of 32 data breaches from 29 US publicly-traded firms from 2011 to 2014, we find that social media disclosure exacerbates the negative stock price’ s response to the announcement. However, such a negative association is contingent on firm’s visibility on traditional media with social media disclosure having a beneficial effect for low-visibility companies.
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Information Security and Privacy, Crisis Communication, Cybersecurity, Data Breach, Social Media, Stock Market
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