Regulating data: Evidence from corporate America

Motoki, Fabio ORCID: https://orcid.org/0000-0001-7464-3330 and Pinto, Jedson (2024) Regulating data: Evidence from corporate America. Journal of Business Finance & Accounting. ISSN 0306-686X

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Abstract

Using the enforcement of the General Data Protection Regulation (GDPR) as our empirical setting, we examine how stricter data privacy and data protection requirements affect shareholder wealth, firms’ investment decisions, and data breaches. Consistent with consumer privacy negatively affecting firms, we find that U.S. firms exposed to the GDPR lose 0.7-1.1% in market value relative to unexposed firms in the week in which the regulation became enforceable. We find that the decrease in market value is partially attributable to a decrease in sales growth. GDPR-exposed firms increase their investment above that of control firms and become less likely to report a data breach post-regulation. The decrease in data breach likelihood is statistically and economically significant, resulting in up to 34 million records not being leaked, which costs between $205 million and $561 million to firms in breach mitigation expenses per year. The results of this study should be of interest to academics and regulators worldwide by examining the costs and benefits of regulating data.

Item Type:	Article
Uncontrolled Keywords:	general business,management and accounting,general economics,econometrics and finance,3* ,/dk/atira/pure/subjectarea/asjc/1400/1400
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
Depositing User:	LivePure Connector
Date Deposited:	17 Jul 2024 08:32
Last Modified:	25 Sep 2024 17:55
URI:	https://ueaeprints.uea.ac.uk/id/eprint/95934
DOI:	10.1111/jbfa.12820

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