The economic cost of publicly announced information security breaches: empirical evidence from the stock market

  • Authors:

  • Katherine Campbell;Lawrence A. Gordon;Martin P. Loeb;Lei Zhou

  • Affiliations:

  • Accounting and Information Assurance, Robert H. Smith School of Business, University of Maryland, College Park, MD;Accounting and Information Assurance, Robert H. Smith School of Business, University of Maryland, College Park, MD;Accounting and Information Assurance, Robert H. Smith School of Business, University of Maryland, College Park, MD;Accounting and Information Assurance, Robert H. Smith School of Business, University of Maryland, College Park, MD

  • Venue:
  • Journal of Computer Security - IFIP 2000
  • Year:
  • 2003

Quantified Score

Hi-index 0.00

Visualization

Abstract

This study examines the economic effect of information security breaches reported in newspapers or publicly traded US corporations. We find limited evidence of an overall negative stock market reaction to public announcements of information security breaches. However, further investigation reveals that the nature of the breach affects this result. We find a highly significant negative market reaction for information security breaches involving unauthorized access to confidential data, but no significant reaction when the breach does not involve confidential information. Thus, stock market participants appear to discriminate across types of breaches when assessing their economic impact on affected firms. These findings are consistent with the argument that the economic consequences of information security breaches vary according to the nature of the underlying assets affected by the breach.