Information Systems Security and Privacy


The 2009 CSI Computer Crime and Security Survey indicate that the financial fraud costs about $450,000 per victimorganization. A comprehensive empirical investigation was conducted on the effect of publicly announced privacy breacheson the market value of breached companies. We use the abnormal returns, risk factors, and volumes to measure the marketeffect on the breached firms. Our results show that the cumulative abnormal return (CAR) due to a privacy breach is -1.5percent at the .05 level. Our results also show that the mean risk factor for the breached firms increases by about 4 percent onthe event day compare to the 250 pre-event days Finally, our results show that the volume of the event stocks are higherduring the event days relative to the pre-event 60 days. None of the research studies in the information privacy breach areahas investigated the abnormal risk and abnormal volume patterns around the privacy breach announcements.