IDEAS home Printed from https://ideas.repec.org/a/bla/jbfnac/v52y2025i5p2091-2110.html

Mandatory Data Breach Disclosure and Insider Trading

Author

Listed:
  • Xi Chen
  • Gilles Hilary
  • Xiaoli Tian

Abstract

We examine whether mandatory data breach disclosure affects insider‐selling behavior and find that selling profits are greater after states require firms to disclose data breaches. The effect is more pronounced for firms with weaker corporate governance, higher cybersecurity risk, and without prior investment in material cyber protection programs. However, insiders profit less when they operate in states with stricter laws and face higher litigation risks. The evidence is consistent with managers personally hedging risks in the capital market when mandatory disclosure laws designed to protect customers are weakly enforced. Laws designed to improve transparency in the product markets may have the unintended effect of reducing the integrity of financial markets. However, insider sales also facilitate the incorporation of bad news in stock prices, making idiosyncratic crashes less likely.

Suggested Citation

  • Xi Chen & Gilles Hilary & Xiaoli Tian, 2025. "Mandatory Data Breach Disclosure and Insider Trading," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 52(5), pages 2091-2110, November.
    • Handle: RePEc:bla:jbfnac:v:52:y:2025:i:5:p:2091-2110
    DOI: 10.1111/jbfa.12842
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jbfa.12842
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jbfa.12842?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jbfnac:v:52:y:2025:i:5:p:2091-2110. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.