Engineering 101

Data Breach Announcements Timed to Bury the Bad News

New research in the INFORMS journal Management Science shows that companies that have had data breaches intentionally stage the timing of the announcements around other significant breaking news to reduce media coverage. What does that mean to you?

  • The strategy harms consumers because the stock market doesn’t “punish” these firms for their error
  • Strategically timing the announcement of data breaches reduces the median decline in market capitalization loss from $347 million to $85 million

The study: “Data Breach Announcements and Stock Market Reactions: A Matter of Timing?” conducted by Schuetz and Jens Foerderer of the Technical University of Munich, shows that strategic timing is most common in data breaches that are of greatest interest to consumers, such as those that are more severe and involve healthcare data, financial data and credentials.

The study recommends that lawmakers mandate shorter disclosure deadlines from 30 days to 3 days. For more information, here’s the complete study.

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