Cyber-attacks and stock market activity

I study how financial markets react to unexpected corporate security breaches in the short and long-term. The main results show that daily excess returns drop, trading volume increases due selling pressure, liquidity improves upon public disclosure of first-time hacking events. evidence from search frequency Google suggests such short-lived market reaction is increasing investors' attention. Cyber-attacks affect firms' policies long run, up five years after breach announcement. These are consistent with hypothesis represent negative shocks reputations. • Financial as drop. Trading pressure improves. Such In term, R&D dividends drop while target firms keep compensating CEOs.