Corporate communication and likelihood of data breaches

Kobana Abukari, Shantanu Dutta, Chen Li, Songlian Tang and Pengcheng Zhu

International Review of Economics & Finance, 2024, vol. 94, issue C

Abstract: We use data breaches of U.S. firms from 2005 to 2018 to examine the association between corporate communication and the likelihood of data breaches. We find that positive tone of annual reports (10-K filings) has a significant and positive association with the odds of a data breach. We further explore the related mechanisms and find strong evidence that the association between positive tone of annual reports and odds of a data breach is largely attributable to a firm's internal resources and market prospects (proxied by ‘cash to total assets’ and ‘excess stock returns’). We also find that in the firms with more readable 10-K filings, positive tone is not associated with a higher likelihood of a data breach. This finding highlights the importance of communication tone and transparency in the context of potential data breaches.

Keywords: Data breach; Corporate communication; 10-K disclosure; Sentiment; Readability (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:94:y:2024:i:c:s1059056024004258

DOI: 10.1016/j.iref.2024.103433

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