Do data breach disclosure laws matter to shareholder risk?

Khaled Elmawazini (), Samir Saadi, Syrine Sassi, Khiyar Abdalla Khiyar and Mohammed Ali

Finance Research Letters, 2023, vol. 53, issue C

Abstract: This paper examines whether and how data breach disclosure laws influence shareholder risk, which we measure by the firm's cost of equity capital. Exploiting a series of natural experiments regarding staggered state‐level data breach disclosure laws in the U.S., we find that the passage of mandatory disclosure laws leads to a decrease in the cost of equity. Accordingly, our key result suggests that shareholders perceive data breach disclosure laws as a risk-decreasing factor. Our finding is insensitive to alternative estimation methods, the choice cost of equity capital measures, and potential endogeneity concerns.

Keywords: Cyberattacks; Data breach disclosure laws; Shareholder risk; Cost of equity capital (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:53:y:2023:i:c:s1544612322007644

DOI: 10.1016/j.frl.2022.103588

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