Data Security and Merger Waves

35 Pages Posted: 8 Jul 2020

See all articles by Yuan Sun

Yuan Sun

Lingnan University - Department of Finance and Insurance

Lai Wei

Lingnan University - Department of Finance and Insurance

Wensi Xie

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Date Written: July 8, 2020

Abstract

We examine whether data security affects the merger waves in the era of big data. Exploiting the staggered adoption of laws that require mandatory disclosure of data breaches across states, we find a significant increase in the number and values of acquisitions of a state’s data-intensive companies after the state enacted the laws. The effects are stronger among industries that are more competitive and technology intensive. Acquirers offer a higher premium for data-intensive targets in states that have adopted the laws. These results suggest that the data breach laws facilitate M&A deals by mitigating targets’ data lemon problem.

Keywords: Data Security, Mergers and Acquisitions (M&As), Merger Waves

JEL Classification: K20, L51, G34

Suggested Citation

Sun, Yuan and Wei, Lai and Xie, Wensi, Data Security and Merger Waves (July 8, 2020). Available at SSRN: https://ssrn.com/abstract=3646227 or http://dx.doi.org/10.2139/ssrn.3646227

Yuan Sun

Lingnan University - Department of Finance and Insurance ( email )

8 Castle Peak Road
New Territories, Hong Kong 0000
Hong Kong

Lai Wei

Lingnan University - Department of Finance and Insurance ( email )

8 Castle Peak Road
Lingnan University
Hong Kong, New Territories
China

Wensi Xie (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
171
Abstract Views
752
rank
221,903
PlumX Metrics