The Public’s Response to Data Breaches
Diego Satkofsky · eScholarship (California Digital Library) · 2019
Data breaches represent massive infringements of privacy in today's technologically driven society.As a major topic of political, economic, and moral debate, they deserve more attention.In this paper, I present an analysis of the public's response to data breaches through an event study examination.By using the stock market as a proxy for the public's response, I find that data breach announcements induce an average abnormal return of -.93% for the companies at fault.Furthermore, I conduct a cross-sectional analysis to determine how certain characteristics of the company and event drive the returns.I find that the public responds more negatively to breaches when a larger number of individuals are affected.I also delve into the implications of "privacy fatigue" and discover evidence suggestive that the public has grown tired of privacy violations.