Hacking Corporate Reputations

112 Pages Posted: 19 Mar 2018 Last revised: 22 Jan 2024

See all articles by Pat Akey

Pat Akey

University of Toronto - Rotman School of Management; European Corporate Governance Institute (ECGI)

Stefan Lewellen

Pennsylvania State University - Department of Finance

Inessa Liskovich

University of Texas at Austin - Department of Finance

Christoph Schiller

Arizona State University (ASU) - W.P. Carey School of Business

Date Written: December 31, 2023

Abstract

We exploit unexpected corporate data breaches to study the loss and repair of corporate reputation. Reputation loss decreases equity value and brand value, increases customer churn and prompts more negative media coverage. Firms repair their reputation by increasing their charitable donations (a novel measure of CSR investment), political contributions, employee wages and investment in IT. These actions are targeted to stakeholders that are particularly important or in situations that are particularly salient to their stakeholders. We observe similar dynamics of reputation loss and repair following the release of negative news about firms’ social behaviors.

Keywords: Corporate Social Responsibility, CSR, Corporate Reputation, Cyberattack, Data Breach

JEL Classification: G32, G31, G14, M14, D22, D23, L21, L25, L86, G38, G39

Suggested Citation

Akey, Pat and Lewellen, Stefan and Liskovich, Inessa and Schiller, Christoph, Hacking Corporate Reputations (December 31, 2023). Rotman School of Management Working Paper No. 3143740, European Corporate Governance Institute – Finance Working Paper No. 948/2024, Available at SSRN: https://ssrn.com/abstract=3143740 or http://dx.doi.org/10.2139/ssrn.3143740

Pat Akey

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Stefan Lewellen (Contact Author)

Pennsylvania State University - Department of Finance ( email )

University Park, PA 16802
United States

Inessa Liskovich

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

Christoph Schiller

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

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