Hacking Corporate Reputations

81 Pages Posted: 19 Mar 2018 Last revised: 23 Jan 2021

See all articles by Pat Akey

Pat Akey

University of Toronto - Rotman School of Management

Stefan Lewellen

Pennsylvania State University

Inessa Liskovich

University of Texas at Austin - Department of Finance

Christoph Schiller

Arizona State University (ASU) - W.P. Carey School of Business

Date Written: January 22, 2021

Abstract

We exploit unexpected corporate data breaches to study whether firms invest in rebuilding intangible capital following negative reputation shocks. Data breaches cause long-term reductions in firm value and burn reputational capital, creating an incentive for firms to rebuild intangible capital through activities such as CSR. Using firms' charitable contributions as a novel measure of CSR investment, we show that firms increase CSR investment and earn higher CSR scores after reputation-reducing data breaches. We find similar results using a broader sample of negative reputation shocks. Our paper is among the first to document how firms respond following the destruction of reputational capital.

Keywords: Corporate Social Responsibility, CSR, Corporate Reputation, Cyberattack, Data Breach

JEL Classification: G32, G31, G14, M14, D22, D23, L21, L25, L86, G38, G39

Suggested Citation

Akey, Pat and Lewellen, Stefan and Liskovich, Inessa and Schiller, Christoph, Hacking Corporate Reputations (January 22, 2021). Rotman School of Management Working Paper No. 3143740, Available at SSRN: https://ssrn.com/abstract=3143740 or http://dx.doi.org/10.2139/ssrn.3143740

Pat Akey

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Stefan Lewellen (Contact Author)

Pennsylvania State University ( email )

360 Business Building
University Park, PA 16802
United States

Inessa Liskovich

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

Christoph Schiller

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

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