In today’s era of increased scrutiny and calls for regulation around data privacy, security breaches are bad news for both corporations and consumers, often having a negative effect on a company’s stock price—although that impact has decreased in recent years as Wall Street becomes used to more frequent data breaches.
The report finds that share prices fell 7.27% on average after a data breach, hitting a low point almost three weeks later, with those that leak highly sensitive information—like credit card and social security numbers—unsurprisingly leading to greater drops in a company’s share price. The size of a breach does not directly correlate to bigger drops in stock prices, however; companies that had the most records exposed saw their stock actually recover and outperform the market, while companies with smaller breaches saw their shares struggle in the six months after the fact.
Older breaches before 2012, like TJ Maxx or Sony, surprisingly met with stronger negative reactions from Wall Street than more recent ones like Adobe or Equifax. As data breaches have become increasingly common in recent years, that has caused a “breach fatigue” effect—where the market is less shaken by them as time goes on, according to theBreached companies underperform the market in the long-term, growing 8.38% on average over the following year but still trailing the Nasdaq by 6.
that left thousands of customers locked out of their accounts for over an hour, resulting in a nearly 2% drop in its share price.
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