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Social media and stock price reaction to data breach announcements: evidence from US listed companies

Rosati, Pierangelo orcid logoORCID: 0000-0002-6070-0426, Deeney, Peter orcid logoORCID: 0000-0002-8112-8692, Cummins, Mark orcid logoORCID: 0000-0002-3539-8843, van der Werff, Lisa orcid logoORCID: 0000-0003-4529-4690 and Lynn, Theo orcid logoORCID: 0000-0001-9284-7580 (2018) Social media and stock price reaction to data breach announcements: evidence from US listed companies. Research in International Business and Finance, 47 . pp. 458-469. ISSN 0275-5319

Abstract
Data breaches are not only on the increase but firms struggle to detect, defend and respond to such breaches. A data breach opens a period of crisis for the affected firm, generates complex information, and requires providing information to a variety of stakeholders in a timely and proper manner. This article reports one of the first studies on the impact of social media exposure by affected firms on stock price reaction to a data breach announcement. Using an event study methodology on a sample of 87 data breaches from 73 US publicly-traded firms from 2011 to 2014, we find that use of social media exposure at the time of a data breach exacerbates the negative stock price to the announcement. Interestingly, we find that this negative association is contingent on traditional media visibility; the effect is positive for low-visibility companies. Based on our results, we posit that there is a need for a contingency model for social media communication during firm crises and such a model should be based at least on firm size, visibility and the type of crisis.
Metadata
Item Type:Article (Published)
Refereed:Yes
Subjects:Business > Finance
Social Sciences > Communication
DCU Faculties and Centres:DCU Faculties and Schools > DCU Business School
Research Institutes and Centres > Irish Centre for Cloud Computing and Commerce (IC4)
Publisher:Elsevier
Official URL:http://dx.doi.org/10.1016/j.ribaf.2018.09.007
Copyright Information:© 2018 Elsevier
Use License:This item is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 3.0 License. View License
Funders:Irish Centre for Cloud Computing and Commerce
ID Code:22680
Deposited On:19 Sep 2018 10:11 by Pierangelo Rosati . Last Modified 21 Feb 2022 13:20
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