New research from Emily Wang, assistant professor of finance at the Martha and Spencer Love School of Business, reveals how data breach announcements may reshape deposits, loans and even stock market performance in the months following a breach.
When a bank suffers a data breach, the fallout reaches far beyond bad headlines. New research from Emily Wang, assistant professor of finance in the Martha and Spencer Love School of Business, shows that breaches can disrupt banks’ deposits, loans and even stock performance for months.
Wang’s study, “Data Breach Announcement Effect on Bank Loans, Deposits, and Stock Performance”, published in the “Journal of Financial Services Research”, examines what happens after a U.S. bank discloses a breach. The first impact is on deposits. She found that insured deposits often dip in the same quarter a breach becomes public, suggesting that even everyday customers may pull back when trust is shaken.
Brokered deposits, which are large sums gathered through intermediaries, also tend to decline, although by about a year. Banks may increase lending activity in the months that follow, possibly to offset lost deposits or rebuild investor confidence.
The stock market responds quickly. Banks affected by breaches see negative returns the next day, and Wang found that this effect can persist for up to three quarters.
By analyzing years of bank reports and stock data, Wang and co-author Isarin Durongkadej of Illinois State University show that breaches are not just reputational setbacks. They can alter a bank’s financial behavior and leave lasting marks on its market value.
“In class, I plan to have students discuss the emerging risks that firms are facing and examine how factors like cyber risk can influence firm valuation and investor behavior,” Wang said. “We’ll look specifically at companies that disclosed data breaches in their SEC filings, such as 10-K or 10-Q reports, to see how those events impact market perception.”
Wang joined the faculty of the Martha and Spencer Love School of Business in the Summer of 2023 after two years with Le Moyne College. She earned her doctorate in finance from Oklahoma State University and joined the Elon faculty with scholarly interests in corporate finance, investment and cybersecurity.
Wang teaches courses in financial management, investments, principles of finance, financial markets and institutions, and general insurance.