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Do Data Breaches Affect Stock Performance in the Long Run? (zdnet.com)

Posted by EditorDavid on from the bared-markets dept.

Trailrunner7 tipped us off to this story on ZDNet: A multi-year study on the stock price evolution for breached companies reveals that data breaches have a long-term impact on a company's stock price, even if it's somewhat minimal. The study, carried out by the research team behind the CompariTech web portal, looked only at companies listed on the New York Stock Exchange that suffered and publicly disclosed breaches of one million records and over in the past three years. In total, the list included 28 companies, such as Apple, Adobe, Anthem, Community Health Systems, Dun & Bradstreet, eBay, Equifax, Experian, Global Payments, Home Depot, Health Net, Heartland Payment Systems, JP Morgan Chase, LinkedIn, Monster, T-Mobile, Sony, Staples, Target, TJ Maxx, Under Armour, Vodafone, and Yahoo. "In the long term, breached companies underperformed the market," the CompariTech team concluded in their report.

"After 1 year, Share price grew 8.53% on average, but underperformed the NASDAQ by -3.7%. After 2 years, average share price rose 17.78%, but underperformed the NASDAQ by -11.35%. And after three years, average share price is up by 28.71% but down against the NASDAQ by -15.58%." Study authors noted that the impact of data breaches likely diminished over time, but the damage was still visible in the stock's NASDAQ performance indicator even after three years, in some cases. Although other factors also weighed into how a stock performed, the fact that all of the analyzed breached companies had a poor performance cannot be ignored.
Finance and payment companies suffered the largest drops in their stock prices after a data breach -- with the drops being larger when the breached data included "highly sensitive" info like credit card and social security numbers.

15 of 32 comments (clear)

  1. no by nnet · · Score: 1

    I'm going to say, no.

    1. Re: no by PopeRatzo · · Score: 1

      You are a fucktard who doesn't understand proper use of punctuation. The comma in your post was completely unnecessary.

      The comma was appropriate. Quotation marks around the word "no" would have been more appropriate, but either way, you are wrong and owe the GP an apology.

      --
      You are welcome on my lawn.
  2. TRUMP predicts KGB wining ELECTIONS in LONG RUN by IllIlIllIlIlIIIlIlIl · · Score: 1

    Just KIDDING!

  3. No. by Anonymous Coward · · Score: 1

    Because there is no accountability (ie. massive fines, etc.)

    1. Re:No. by myid · · Score: 1

      Because there is no accountability (ie. massive fines, etc.)

      Right. The courts should impost a massive fine, then split up the fine among the people whose information was stolen. Then stockholders and the company management would care about security - not just that company, but all companies.

  4. Cause or effect? by petes_PoV · · Score: 1

    Do data breaches cause financial under performance? Or do poorly run companies not see the importance of strong defences to prevent data breaches.

    --
    politicians are like babies' nappies: they should both be changed regularly and for the same reasons
    1. Re:Cause or effect? by Bite+The+Pillow · · Score: 1

      Underperforming comes from buying credit monitoring for those affected, extra PR advertising, and hiring competent people so when it happens again you can say you tried. Probably lots of time spent with law enforcement, and overtime to rebuild servers asap.

      It isn't huge, but it is noticeable. And likely things like putting some money aside for the inevitable lawsuit, keep reminding investors that a potential large payout exists.

      Surely they have some sort of insurance, which if they claim will increase in price. So yeah cause.

  5. DUH by SmaryJerry · · Score: 1

    It's almost like all the short events make up the long term. Surprising!

  6. No, Non, Nyet. by PopeRatzo · · Score: 1

    The only things that affect stock price today are the Fed keeping interest rates artificially low, rent seeking, and corporate tax cuts. When the reckoning comes, it's going to be spectacular. I predict that within a year we'll be bailing out corporations and banks like never before. The deficit goes up, bond prices are straining their harnesses, and workforce participation continues to drop under Trump.

    Companies don't have to do a good job any more.

    --
    You are welcome on my lawn.
    1. Re: No, Non, Nyet. by PopeRatzo · · Score: 1

      Were you always this stupid?

      Did you know that the last three months, 500,000 more working-age people left the workforce? And that during a supposed boom in job numbers? Those people aren't counted in Trump's job numbers, just so you know.

      --
      You are welcome on my lawn.
    2. Re: No, Non, Nyet. by PopeRatzo · · Score: 1

      The Fed, not Trump, sets interest rates.

      And who do you think sets the Fed?

      https://www.cnbc.com/2018/07/2...

      The President doesn't actually have that much control over the deficit.

      The deficit increase is entirely from the tax cuts and the increase in military spending, which were both Trump-driven.

      Congress controls spending levels and controls borrowing.

      The current GOP-majority congress is entirely, 100% controlled by Trump.

      --
      You are welcome on my lawn.
    3. Re:No, Non, Nyet. by PopeRatzo · · Score: 1

      If you can find a U2 chart showing that workforce participation has increased

      No, workforce participation didn't increase. It decreased.

      https://slashdot.org/comments....

      In February, it was 63.0. In August, it was 62.7. That's a loss of over 500,000 workers.

      --
      You are welcome on my lawn.
  7. Nope by nehumanuscrede · · Score: 1

    Human memory is too short lived for it to be a long term issue.

    Catastrophe today, forgotten soon after once something else gets their attention.

  8. Stock price is not a good performance measure by CptJeanLuc · · Score: 1

    Data braches and its consequences are wrong for various reasons. People having their data exposed because of a negligent or incompetent company is wrong. Regardless of stock price.

    I am tired of the "American" mindset that the effect of "things" are ultimately measured by the performance of the economy. Economy doing ok? Well, then nothing bad has really happened. Sony was hacked in a huge scandal in 2018, but one year later noone cares and four years later nobody remembers? Then it does not matter, and it is as if it never happened - who cares. Elect a p... grabbing dictator loving president and the economy somehow keeps improving? Guess that wasn't so bad then.

    The sooner America (and other hardcore capitalists around the world) learn to stop using money as the ultimate measure of good or bad, and start optimizing for things that matter (such as quality of life), is the moment your country(ies) will be able to start improving.

  9. Yes, depending by Blame+The+Network · · Score: 1

    HBGary is an example. I'm unsure if they were listed but it definitely trashed their business badly.