This paper analyzes the costs associated with a security breach on breached firms. The paper notes that the analyzed breached firms lost about 2.1% of their market valuation, or about 1.65 billion dollars per breach after just two days. Abnormal variations from this number were explained by how large the firm was, what type of firm it was, and what year the breach occurred. The paper also notes that while breaches negatively affected firms, it positively affected security organizations, as after public disclosures of breaches security developers realized an average return of 1.36% or 1.06 billion two days after the disclosure. The paper concludes that poor security has a high cost for investors as well, and encourages firms that do not already invest in cybersecurity to do so.
