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Banalizing violations reduces their impact on stock exchanges


Despite the serious consequences of data breaches, they are apparently becoming so common that their impact on a company’s stock performance is becoming less and less. In its annual report published yesterday, Comparitech analyzed the closing prices of the shares of 34 companies, all listed on the New York Stock Exchange, from the day before they reported data breaches to the market. All resulted in at least one million leaked records, and some exceeded 100 million, with companies breached more than once. The total was 40 violations.

The study reveals that the share price of a breached company drops by an average of 3.5% in the 14 days following disclosure, reaching its lowest point around 110 afterwards. An earlier analysis, carried out in 2019, suggested that stock prices would fall by an average of 7.27%.

A notable trend is that violations from 2012 onwards were met with more immediate negative reactions on Wall Street, the study says: stock prices fell further, and took an average of 109 days to recover. For data breaches that occurred between 2013 and 2016, the stock price falls were “less severe” than in the previous category and there was less than a 1% difference in value between the six months before and after the disclosure of a security incident .

When it comes to breaches reported in 2017 and after, it took about 100 days for prices to recover and overall performance was only “slightly worse” in the six months after the breach.

In today’s market, technology and financial services companies have suffered the most after a data breach, while e-commerce and social media companies are “the least affected,” according to Comparitech.

“Violations that leak highly confidential information, such as credit card and social security numbers, show more immediate declines in stock price performance on average than companies that leak less sensitive information, but in the long run, they don’t necessarily suffer more, ”notes the survey.

With international agencies

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