The Financial Market Effects of Cybersecurity Breaches and Corporate Cyber Risk Disclosures

This study examines the stock market reaction to cybersecurity breach announcements using an international sample of publicly listed firms from 2015 to 2024. The analysis shows that breaches lead to statistically significant negative abnormal returns in the short term, indicating immediate adverse market reactions. However, no statistically significant long-term effects are observed, suggesting that the negative impact cannot be attributed to the breach over extended event windows. In addition, no consistent evidence of informed trading prior to breach announcements is found. Prior cybersecurity risk disclosure does not significantly explain variation in abnormal returns. Subsidiary breaches tend to be associated with less negative abnormal returns, although the effect is limited and only weakly significant in the short-term. Market reactions ultimately vary substantially across firms and reflect firm-specific factors.