NSA Revelations of Privacy Breaches: Do Investors Care?

Our study is focused on the financial impact of NSA-security and privacy breach events announced in the news media between June 2013 and March 2014. While prior research has provided empirical evidence on the stock market reaction of security and privacy breaches such as confidentiality, integrity and availability breaches, there is scarce research on the financial impact of NSA-related security and privacy breaches. Based on previous studies, we apply the event study framework to analyze how NSA revelations influence investors’ confidence. Results show that NSA-breach announcements have a negative impact on investors’ confidence, which is confirmed by the negative cumulated abnormal returns on the event date. Our study contributes hence with insights on a relatively new phenomenon of high relevance concerning the security of information assets.