The Impact of Data Breach on Short-Term Profit Margins

Abstract

This paper addresses the impact of data breaches on the short-term profit margin of breached firms. Data from 2013 to 2018 is used to test the model. The data represents 441 breaches, impacting 166 companies in twelve industries, with 77 percent of the breaches in the retail, technology, healthcare, and financial sectors. The analysis is first conducted with the broad collection of businesses, then repeated for retailers only. Breaches were found to have no adverse effect on profit margins for the broad group of firms. The retailers were negatively affected, but this was not statistically significant.