12 July 2017 at 18:23 BST

Data breaches impact long-term share value for corporates

An analysis of companies suffering data breaches reveals damage to the company's value years later.

Data breaches have a negative impact on a company's value and can slow growth for years. A survey by Comparitech analysed 24 leading companies, most of them listed on the New York Stock Exchange. Stocks on average suffered an immediate decrease in share price following a breach. In the long term, share prices continued to rise on average, but at a much slower pace. Breached companies tended to underperform the NASDAQ - after three years the NASDAQ ultimately outperforms them by a margin of over 40 per cent. The research found that more recent breaches had less of a negative impact on share price than older ones.

Largest impact

Finance companies experienced the largest immediate decline in share price directly after a breach, but internet businesses, such as ecommerce and social media companies, suffered the most in the long term. Interestingly, larger breaches had less of an impact on share price than smaller breaches. Unsurprisingly, breaches of highly sensitive data, such as credit card and social security numbers, had a greater impact on the immediate drop in share price following a breach than companies that leaked less sensitive info, such as email addresses. 

Methodology

The companies included: Apple, Adobe, Anthem, BetFair, Countrywide, Community Health Systems, Dun & Bradstreet, Ebay, Experian, Global Payments, Home Depot, Health Net, Heartland Payment Systems, JP Morgan Chase, LinkedIn, Monster, T-Mobile, Sony, Staples, Target, TJ Maxx, Vodafone, VTech, and Yahoo. Source: The Street

 
   
 
 
 

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