Data breach events are heavily discussed in social media. Data breaches, which imply the loss of personal sensitive data, have negative consequences on the affected firms such as loss of market value, loss of customers and reputational damage. In the digital era, wherein ensuring information security is extremely demanding and the dissemination of information occurs at a very high speed, protecting corporate reputation has become a challenging task. While several studies have provided empirical evidence of the financial consequences of data breaches, little attention has been dedicated to the link between data breaches and reputational risk. To address this research gap, we have measured the reputational effect of data breaches based on social media content by applying a novel approach, the sentiment-based event study. The empirical results provide strong evidence that data breach events deteriorate the reputation of companies involved in such incidents.
Sinanaj, Griselda; Muntermann, Jan; and Cziesla, Timo, "How Data Breaches Ruin Firm Reputation on Social Media! - Insights from a Sentiment-based Event Study" (2015). Wirtschaftsinformatik Proceedings 2015. 61.