The effect of information security breaches on stock returns : Is the cyber crime a threat to firms ?

A very debated issue in recent years is the cyber crime and its impact on market returns and reputation of firms. The issue is made particularly actual by the proliferation of information technology and internet. Information security breaches are concerned with protecting the accessibility, integrity and confidentiality of information. As a consequence, there are potential high explicit and implicit costs to firms due to these breaches. This paper investigates the impact of information security breaches on stock returns. We compiled a broad dataset of cyber attacks which involved firms all over the world. Using eventstudy methodology, we provide empirical evidence on the effect of announcements of cyber attacks on the market value of firms from 1995 to 2012. Our main data sources are Factiva and Datastream. Our expected findings have interesting operating implications, regarding stock market reaction to public announcements of cyber attacks. EFM Classification: 510, 530, 570 JEL Classification: G10, G15, G20