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Economic Impact to Overall Stock Market Value from Information Security & Data Breach Events

Abstract…

As the world becomes more technological advanced and reliant, it is crucial to better understand why data breaches remain prevalent. To better understand why security breach incidents continue to occur, we will approach the data breach concern from an economic perspective. We posit that there is a lack of financial incentive to motivate companies to invest in resources necessary to proactively prevent data breach incidents. Furthermore, we argue that higher standards for security and data protection is due to organizational culture, rather than the potential for financial loss. A quantitative analysis will be conducted to assist in determining the financial impact a data breach has on the overall stock value of the associated organizations. For this study we will examine the impact of data breach investments within two companies who approach data threats differently: Facebook and Apple. This study will utilize the Event Study Methodology (ESM) to examine the economic impact of data breach events. The objective of this study is to examine data breach incidents to better understand the financial relationship between stock market value and security investments. Focusing on the financial impact that organizational culture plays on corporate investments in privacy, our research will make an academic contribution to the extant body of literature across multiple scientific domains.

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