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A meta-analysis of the factors influencing the impact of security breach announcements on stock returns of firms

Author

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  • Sepideh Ebrahimi

    (York University)

  • Kamran Eshghi

    (Laurentian University FA-351)

Abstract

Concurrent with the increase in organizations’ reliance on IT systems for conducting business with their consumers and partners, there have been increases in the risk and instances of security breaches of IT systems. As a result, a large body of research has been conducted to study the financial consequences of such security breaches in general and stock market reactions using the event study methodology in particular. Notwithstanding the significant contributions of the extant studies on the topic, inconsistencies could be observed about the existence and magnitude of shareholders’ reactions to announcements of security breaches by firms. As such, this paper addresses this gap through a meta-analysis of 63 studies (with a total of 20,936 instances of security breach announcements). The results suggest that a significant relationship exists between announcements of security breach and a drop in the experiencing firms’ stock returns. In addition, this relationship is impacted by the type of security breach, time of the security breach event, the country in which the experiencing firms operate, and the size of those firms.

Suggested Citation

  • Sepideh Ebrahimi & Kamran Eshghi, 2022. "A meta-analysis of the factors influencing the impact of security breach announcements on stock returns of firms," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(4), pages 2357-2380, December.
    • Handle: RePEc:spr:elmark:v:32:y:2022:i:4:d:10.1007_s12525-022-00550-2
    DOI: 10.1007/s12525-022-00550-2
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    References listed on IDEAS

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    Cited by:

    1. Rainer Alt, 2022. "Electronic Markets on AI and standardization," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(4), pages 1795-1805, December.

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    More about this item

    Keywords

    Event study; Security breach; IT security; Meta-analysis;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K24 - Law and Economics - - Regulation and Business Law - - - Cyber Law
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management

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