The Effect of a Data Breach Announcement on Customer Behavior: Evidence from a Multichannel Retailer:

Published on Feb 19, 2018in Journal of Marketing9.462
· DOI :10.1509/JM.16.0124
Ramkumar Janakiraman17
Estimated H-index: 17
(USC: University of South Carolina),
Joon Ho Lim4
Estimated H-index: 4
(ISU: Illinois State University),
Rishika Rishika6
Estimated H-index: 6
(USC: University of South Carolina)
Sources
Abstract
AbstractIn this study, the authors assess the effects of a data breach announcement (DBA) by a multichannel retailer on customer behavior. They exploit a natural experiment and use individual customer transaction data from the retailer to conduct a detailed and systematic empirical examination of the effects of a DBA on customer spending and channel migration behavior. To identify the effects, the authors compare the change in customer behavior before and after the DBA between a treatment group (customers whose information is breached) and a control group (customers whose information is not breached) using the difference-in-differences modeling framework. They find that although the data breach results in a significant decrease in customer spending, customers of the firm migrate from the breached to the unbreached channels of the retailer. The findings further reflect that customers with a higher retailer patronage are more forgiving because the negative effects of the DBA are lower for customers with a h...
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