Strategic Impression Management: Pre-Announcement Social Media Discourse and Market Reactions to Data Breach Announcements
摘要
Cybersecurity incidents affect many companies today, and victim organizations try to do everything they can to minimize the impact. Our study investigates the role of social media engagement preceding data breach announcements and its influence on market reactions. We posit that (1) social media discourse about a firm increases before a data breach announcement, suggesting potential impression management efforts; and (2) such increased discourse tempers the negative effect of the announcement on cumulative abnormal returns, thus influencing the market reaction. An empirical analysis of data breach announcements and corresponding Twitter activity confirms both hypotheses. We find a significant surge in daily tweets about the firms 11 to 2 days prior to the announcements compared to a baseline of daily tweets, indicating the potential use of strategic impression management by the firms. Moreover, a rise in pre-announcement social media discourse is associated with less negative market reactions, unveiling a crucial link between social media engagement and the financial implications of data breaches. This research underlines the importance of proactive social media strategies for firms managing data breaches.