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

Nico Foecking, Mei Wang and Toan Luu Duc Huynh

Technology in Society, 2021, vol. 67, issue C

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.

Keywords: Data breaches; Market reactions; Stock prices (search for similar items in EconPapers)
JEL-codes: M21 O30 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:teinso:v:67:y:2021:i:c:s0160791x21001925

DOI: 10.1016/j.techsoc.2021.101717

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