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How do investors react to the data breaches news? Empirical evidence from Facebook Inc. during the years 2016–2019

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  • Foecking, Nico
  • Wang, Mei
  • Huynh, Toan Luu Duc

Abstract

We examine in this paper the effect of data breaches on Facebook share prices from 2016 until 2019. This analysis revealed counterintuitive results regarding stock price using a sample of multiple firms in the extant literature. The findings indicate that there is no significant effect of data breaches on the share price of Facebook. In comparison, data breaches of other publicly traded U.S. companies resulted in a cumulative average abnormal return on the event day and the following day. In addition, the other factors found in the literature about data breaches do not seem to hold for Facebook's case. This paper proposes the explanation of the possibility that the stock prices have already factored in data breaches. Hence, the reactions are only found in the context of surprisingly new data breaches.

Suggested Citation

  • Foecking, Nico & Wang, Mei & Huynh, Toan Luu Duc, 2021. "How do investors react to the data breaches news? Empirical evidence from Facebook Inc. during the years 2016–2019," Technology in Society, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:teinso:v:67:y:2021:i:c:s0160791x21001925
    DOI: 10.1016/j.techsoc.2021.101717
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    Cited by:

    1. Corbet, Shaen & Goodell, John W., 2022. "The reputational contagion effects of ransomware attacks," Finance Research Letters, Elsevier, vol. 47(PB).
    2. Haque, Md Ziaul & Qian, Aimin & Hoque, Md Rakibul & Lucky, Suraiea Akter, 2022. "A unified framework for exploring the determinants of online social networks (OSNs) on institutional investors’ capital market investment decision," Technology in Society, Elsevier, vol. 70(C).

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    More about this item

    Keywords

    Data breaches; Market reactions; Stock prices;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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