Does cybersecurity regulation reduce corporate data-breach risk?

Lujia Gao, Zhaoying Chen, Wei Zhao and Xuanyu Lai

Finance Research Letters, 2025, vol. 78, issue C

Abstract: This study examines the impact of cybersecurity regulation on corporate data-breach risk, leveraging China's Cybersecurity Law implementation as a quasi-natural experiment. Using data from 3,761 Chinese firms from 2007 to 2022, this study reveals that cybersecurity regulation effectively mitigates data-breach risk by enhancing firms’ cybersecurity cultures and systems. Subsequent heterogeneity analysis reveals that the effect is more pronounced for non-state-owned enterprises and high-tech industries. This study contributes to the literature on cybersecurity and data breaches, providing policymakers with insights to optimize cybersecurity regulations.

Keywords: Cybersecurity regulation; Data-breach risk; Cybersecurity law; Cybersecurity risk (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325004349

DOI: 10.1016/j.frl.2025.107171

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