Hacking Corporate Reputations

68 Pages Posted: 19 Mar 2018 Last revised: 9 Jul 2020

See all articles by Pat Akey

Pat Akey

University of Toronto - Rotman School of Management

Stefan Lewellen

Pennsylvania State University

Inessa Liskovich

University of Texas at Austin - Department of Finance

Christoph Schiller

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

Date Written: March 16, 2018

Abstract

We exploit unexpected corporate data breaches to study how firms respond to negative reputation events. Data breaches negatively affect firm profitability, value, and reputation for years following the event, but are not triggered by high or low reputations. In response, firms increase their investment in corporate social responsibility (CSR) by 0.4-0.5 standard deviations. Firms respond similarly after other negative shocks to their reputation. Our paper represents the first empirical study to link CSR investment to firm reputation building and is the first to document how firms respond to the destruction of corporate reputations.

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

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

Suggested Citation

Akey, Pat and Lewellen, Stefan and Liskovich, Inessa and Schiller, Christoph, Hacking Corporate Reputations (March 16, 2018). Rotman School of Management Working Paper No. 3143740, 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

Stefan Lewellen (Contact Author)

Pennsylvania State University ( email )

360 Business Building
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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