Do Data Breaches Damage Reputation? Evidence from 45 Companies Between 2002 and 2018

23 Pages Posted: 14 Jul 2021

See all articles by Christos Makridis

Christos Makridis

Stanford University; Columbia University - Columbia Business School

Date Written: July 13, 2021


While data breaches have become more common, there is little evidence that companies that incur them experience a persistent decline in financial performance or security prices. Using new firm-level data between 2002 and 2018, this paper finds that firms experience a 26-29% increase in intangible capital following an average data breach. However, the largest and most salient breaches are associated with a 5-9% decline in intangible capital following a data breach. These effects are concentrated among firms in consumer-facing industries: smaller (larger) data breaches are associated with more positive (negative) effects on intangible capital. These results suggest that current regulatory guidance may not provide complete incentives for firms to invest in cybersecurity capabilities, particularly for small to medium size breaches.

Keywords: Brand, cybersecurity, data breach, intangible capital, reputation

JEL Classification: D91, G41, H56, L21

Suggested Citation

Makridis, Christos, Do Data Breaches Damage Reputation? Evidence from 45 Companies Between 2002 and 2018 (July 13, 2021). TPRC49: The 49th Research Conference on Communication, Information and Internet Policy, Available at SSRN: or

Christos Makridis (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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