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Do data breach disclosure laws matter to shareholder risk?

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  • Elmawazini, Khaled
  • Saadi, Samir
  • Sassi, Syrine
  • Khiyar, Khiyar Abdalla
  • Ali, Mohammed

Abstract

This paper examines whether and how data breach disclosure laws influence shareholder risk, which we measure by the firm's cost of equity capital. Exploiting a series of natural experiments regarding staggered state‐level data breach disclosure laws in the U.S., we find that the passage of mandatory disclosure laws leads to a decrease in the cost of equity. Accordingly, our key result suggests that shareholders perceive data breach disclosure laws as a risk-decreasing factor. Our finding is insensitive to alternative estimation methods, the choice cost of equity capital measures, and potential endogeneity concerns.

Suggested Citation

  • Elmawazini, Khaled & Saadi, Samir & Sassi, Syrine & Khiyar, Khiyar Abdalla & Ali, Mohammed, 2023. "Do data breach disclosure laws matter to shareholder risk?," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612322007644
    DOI: 10.1016/j.frl.2022.103588
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    References listed on IDEAS

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