Abstract
Firms are collecting more information about their customers than ever before in an attempt to understand and better serve customer needs. At the same time, firms are becoming more vulnerable to the compromise of customer information through security breaches. This study attempts to associate breach reports with the decline in market value of firms using an event study. The results show that firms suffer significant market value depreciation over a short as well as a long time window. Further, the greatest devaluation occurs when larger amounts of customer information are compromised at large companies. Due to the greater potential of customer backlash, negative publicity and liability risk, managers must view customer information breaches as service failures rather than as information system failures. Employing established service failure recovery strategies may allow firms to quickly and proactively address customer privacy concerns and thereby mitigate negative market reaction to information breaches.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
