The Double-Edged Sword of Health Data Breaches: A Comparison of Customer and Stock Price Perspectives on the Impact of Data Breaches of Response Strategies

Date
2022-01-04
Authors
Masuch, Kristin
Greve, Maike
Trang, Simon
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Abstract
Unauthorized access to personal health data, known as data breaches, causes multi-faceted adverse effects and damage. Companies are trying to counteract the impact on customer relationships through recovery strategies such as compensation. On the other hand, there is also a negative effect on the company's stock price. Here, the literature suggests an opposite effect of response strategies, but this has not been explored further until recently. Our study takes both perspectives into account and examines the impact of data breaches on the market valuation in the health sector through an event study. Our results show a controversial relationship: If companies offered compensation to their customers in response to a data breach, this had a negative effect on the company's stock price. Our paper discusses this finding and derives practical implications and lessons learned for response strategies in the case of recent data breaches in the health sector.
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Security and Privacy Challenges for Healthcare, compensation, customer perspective, event study, health data breach response strategies, investor perspective
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