Effects of Information Security Legitimacy on Data Breach Consequences
Faheem Ahmed Shaikh, Damien Joseph · 2019
With legitimacy as a theoretical basis, we argue that firms with higher information security legitimacy draw less firm-specific risk at the stock market. Firms gain information security legitimacy by ensuring that their security practices conform to stakeholder expectations and by actively advertising these efforts. Impression management, by means of voluntary disclosure in case of a data breach, helps firms mitigate financial repercussions on the stock price. We test hypotheses with analyses of stock prices following data breach incidents reported in the media for 150 firms over an eighteen-year period.