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Security Breaches and Firm Value

Author

Listed:
  • Bolster Paul

    (Northeastern University)

  • Pantalone Coleen H

    (Northeastern University)

  • Trahan Emery A

    (Northeastern University)

Abstract

Security breaches may be a normal risk of doing business, or they may result in economic losses and changes in business valuation. A small number of studies outside the finance literature find mixed results regarding the economic impact of security breaches. In this paper, we examine a large sample to determine whether breaches result in significant economic losses and whether the announcement venue has an impact on business valuation. We find a negative and significant impact on firm value when the breach is announced in one of four major news outlets. When the announcement is elsewhere, the impact is minimal.

Suggested Citation

  • Bolster Paul & Pantalone Coleen H & Trahan Emery A, 2010. "Security Breaches and Firm Value," Journal of Business Valuation and Economic Loss Analysis, De Gruyter, vol. 5(1), pages 1-13, April.
  • Handle: RePEc:bpj:jbvela:v:5:y:2010:i:1:n:1
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    References listed on IDEAS

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    1. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    2. Anat Hovav & John D'Arcy, 2003. "The Impact of Denial-of-Service Attack Announcements on the Market Value of Firms," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 6(2), pages 97-121, September.
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    1. repec:eee:ijoais:v:13:y:2012:i:4:p:357-381 is not listed on IDEAS

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