Apologize or Justify? Examining the Impact of Data Breach Response Actions on Stock Value of Affected Companies? Examining the Impact of Data Breach Response Actions on Stock Value of Affected Companies

2021 ◽  
pp. 102502
Author(s):  
Kristin Masuch ◽  
Maike Greve ◽  
Simon Trang ◽  
Lutz M. Kolbe
Keyword(s):  
Data Breach ◽  
Stock Value ◽  
The Impact

scholarly journals Three Essays on Corporate Financial Constraints

2021 ◽  
Author(s):  
◽  
Kwabena Boasiako
Keyword(s):  
Credit Risk ◽  
Financial Markets ◽  
The United States ◽  
Data Breach ◽  
Data Breaches ◽  
The Third ◽  
Financial Deregulation ◽  
Disclosure Laws ◽  
The Impact ◽  
The U.S

<p><b>This thesis is composed of three self-contained empirical essays in corporate finance, with the first two exploring the financial policy and credit risk implications of data breaches, and the third examining whether financing influences the sensitivity of cash and investment to asset tangibility. In the first essay, we contribute to the growing debate on cybersecurity risks and how firms can insulate themselves, at least partially, from the adverse effects of data breach risks. Specifically, we examine the effects of data breach disclosure laws and the subsequent disclosure of data breaches on the cash policies of corporations in the United States (U.S.). Exploiting a series of natural experiments regarding staggered state-level data breach disclosure laws, we find that the passage of mandatory disclosure laws leads to an increase in cash holdings. Our finding suggests that mandatory data breach disclosure laws increase the ex ante risks related to data breaches, hence, firms hold on to more cash as a precautionary motive. Further, we find firms that suffer data breaches adjust their financial policies by holding more cash as well as decreasing external finance and investment.</b></p> <p>The second essay examines the impact of data breaches on firm credit risk. Using firm-level credit ratings and credit default swap (CDS) spreads to proxy for credit risk, we find that data breaches lead to increases in firm credit risk. Firms exposed to data breaches are more likely to experience credit rating downgrades and an increase in the CDS spread of traded bonds. Also, firms who suffer data breaches report lower sales and ROA, experience an increase in financial distress, and conditional on a data breach incident, the likelihood of a future data breach increases. Lastly, these effects are magnified for firms with low-interest coverage ratios.</p> <p>In the third essay, using the financial deregulation of seasoned equity issuance in the U.S. as an exogenous shock to access to equity markets, I investigate the influence of financing on the sensitivity of cash and investment to asset tangibility. I show that financing dampens the sensitivity of cash and investment to asset tangibility and promotes investment and firm growth. This provides evidence that public firms even in well-developed financial markets such as the U.S., benefit from financial deregulation that removes barriers to external equity financing, shedding light on the role of financial markets in fostering growth.</p>

The assessment of the earnings to stock value ratio in line with inflation

2021 ◽  
Vol 14 (2) ◽  
pp. 218-240
Author(s):  
Aleksandr B. MOLOTKOV
Keyword(s):  
Stock Market ◽  
Risk Premium ◽  
Significant Positive Correlation ◽  
Price Ratio ◽  
Suggested Model ◽  
Expected Inflation ◽  
Stock Value ◽  
The Us ◽  
Fundamental Value ◽  
The Impact

Subject. The study discusses the dependence of estimates of the fundamental stock value (based on the earnings-price ratio) on the expected inflation. Objectives. I determine the type and parameters of such dependence. Methods. The research is based on methods for estimating the stock value and regression analysis to define the parameters of the suggested model. Results. For the US stock market (S&P 500 index), it is shown that earnings-price ratio for the earnings averaged over 10 years has a significant positive correlation with the indicator chosen to characterize the expected inflation. It is substantiated that the main reason is the impact of the expected inflation on the real determinants of the fundamental value, primarily on the risk premium. Conditions are formulated under which Gordon's formula can be used to determine the type of relationship between the fundamental stock value and its determinants for a time series of observations with a changing real discount rate. Conclusions. The model is suggested for estimating the fundamental stock value based on the linear relationship between the earnings-price ratio and inflation., and its parameters are determined. The adequacy of the model is confirmed empirically for the US stock market. The findings can complement investor’s decision-making methods in the stock market.

The inhospitable vulnerability

2018 ◽  
Vol 9 (2) ◽  
pp. 223-234 ◽  
Author(s):  
Hsiangting Shatina Chen ◽  
Joseph Fiscus
Keyword(s):  
Information Security ◽  
Hospitality Industry ◽  
Future Research ◽  
Privacy Rights ◽  
Data Breach ◽  
Content Type ◽  
Call To Action ◽  
The Us ◽  
Conceptual Paper ◽  
The Impact

Purpose The purpose of this conceptual paper is to underline several issues related to cybersecurity in the hospitality industry; address the importance of evaluating cyber risks, vulnerabilities and capabilities; and provide suggestions for hospitality operators to minimize the damage that cyberattacks could cause. Future research addressing cyber threats is a call to action. Design/methodology/approach To understand the occurrence and the impact of information security, the researchers reviewed the previous research regarding information security and used the database from Privacy Rights Clearinghouse and collected 76 information security incidents in the US hospitality industry since 2006. Finding The increasing frequency of data breach incidents from 2006 to 2017 indicates that the issue of cybercrimes has become more critical in the hospitality industry. Originality/value This conceptual paper sheds light on the issues of cybersecurity in risk assessment and heightens the necessity of discussing data breach issues in future hospitality research.

Valuation of Corporate Shares, Financial Characteristics, the Impact of Corporate Social Responsibility and Corporate Governance (The Case of Indonesia)

2015 ◽  
Vol 21 (4) ◽  
pp. 850-854
Author(s):  
Oktovianus Nawa Pau ◽  
Muhamad Junus Kasim
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Good Governance ◽  
Agency Cost ◽  
Good Corporate Governance ◽  
Corporate Size ◽  
Stock Value ◽  
Corporate Social ◽  
The Impact

This study aims to prove that if there has been an increase in the value of assets, leverage and corporate social responsibility influence on increasing the value of shares in the Indonesian capital market as a result of the implementation of good corporate governance in Indonesia. This study is a survey of a sample of 19 corporations that have implemented good governance and implement corporate social responsibility. We used fixed effect multivariate regression analysis to examine the dependent variables influences the independent variables. The result of the study show that by implementing good corporate governance can increase the value of corporate assets as well as the impact on the increase in value of the corporate stock market value. This is consistent with Dowling’s research that the implementation of good corporate governance is associated with increased long-term corporate image that will have implications on the value of the corporation. Good governance can explain the relationship between the various parties participating in the corporation that determines the direction of the value of corporate stocks. The model as a whole is significant explaining variation in dependent variable. Which is explaining by R-square 0.68 means that 0.32 explaining by external variables out of the model. Corporate governance influence to corporate size, leverage, agency cost and corporate social responsibility is up to 0.5275 it means moderate strong. Corporate governance influence to corporate stock value is only 0.0084 it means less significant. While corporate size, leverage, agency cost and corporate social responsibility influence to corporate stock value is 0.1477 means less significant.

Vioxx: Too Risky for Merck?

2017 ◽  
pp. 1-23
Author(s):  
Mitchell A. Petersen ◽  
Rashmi Singhal
Keyword(s):  
Decision Making ◽  
Market Value ◽  
Pharmaceutical Product ◽  
Financial Impact ◽  
Decision Making Process ◽  
Good Decision ◽  
Initial Development ◽  
Stock Value ◽  
Subsequent Withdrawal ◽  
The Impact

Once a decision has turned out poorly—such as Merck's decision to launch and support the painkiller Vioxx—it is easy to criticize. However, are these bad outcomes the result of a good decision which turned out unlucky, or are they decisions where the bad outcome could have been predicted? This case follows Merck's pharmaceutical product Vioxx from initial development to launch and subsequent withdrawal, and considers the decisions made at each stage by the Merck executives involved. The case concludes by examining the financial impact of the Vioxx withdrawal on the company and on the Merck stock value.This case allows the students to examine the various steps of Vioxx's development and launch. By doing so, they can consider whether the decision-making process broke down and why. By connecting the Vioxx launch and withdrawal to changes in Merck's cash flow and stock market value, the students can document the impact of such decisions on the value of the firm.

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