Intangible Costs of Data Breach Events

by Griselda Sinanaj
Cumulative thesis
Date of Examination:2017-10-17
Date of issue:2018-01-10
Advisor:Prof. Dr. Jan Muntermann
Referee:Prof. Dr. Jan Muntermann
Referee:Prof. Dr. Olaf Korn
Referee:Prof. Dr. Lutz M. Kolbe
Persistent Address: http://dx.doi.org/10.53846/goediss-6676

 

 

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Abstract

English

The intangible costs of data breach events encompass for instance the loss of investor confidence, reputational damage and loss of competitive advantage. Yet, existing literature sheds light on this phenomenon only to a limited extent due to methodological challenges related to the estimation of intangible concepts. The assessment of the intangible costs of data breach events plays a central role in information security investment decisions, as well as in the implementation of crisis response plans to attenuate the impact of the event announcement. Given the relevance of the assessment of intangible costs in research and practice and the paucity of research in the extant literature, this cumulative dissertation thesis examines the intangible costs of data breach events. In particular, it focusses on the impact on investor confidence and on corporate reputation. While contributing to information security research, this thesis also encourages future research by identifying relevant research paths to explore, as well as methodological and theoretical lacks. The empirical results show a significant negative impact of data breach events on intangible costs and point to the necessity of implementing crisis management plans for the mitigation of such costs. A novel sentiment-based approach is proposed to measure the reputational impact of data breach events, which is an effective instrument for the constant monitoring of corporate reputation and the timely identification of abnormal sentiment. In addition, this thesis investigates the extent of the intangible costs as well as the drivers of reputational risk, providing thus directions on how to increase the effectiveness of crisis management plans.
Keywords: Data breaches; Abnormal returns; Event study; Corporate reputation; Sentiment analysis
 
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