Stock market reaction to data breaches: The moderating role of corporate social responsibility

Abstract

This study explores the potential role of corporate social responsibility (CSR) in mitigating the damage of data breach, a topic that has received scant attention from the literature. Drawing upon the literatures on CSR, stakeholder theory, and the resource-based view (cites), we conceptualize that firms with greater CSR activities accumulate goodwill and cultivate stronger stakeholder relationships, and thus during times of a crisis, such as a data breach, stakeholders are more likely to give the socially responsible firm “the benefit of doubt” and temper their sanctions, mitigating the damage of the breach.