Cyber risk and corporate share repurchases

Abstract

This study investigates the relationship between cyberattacks and corporate share repurchases among U.S. firms. The results indicate that firms typically increase share repurchases following a cyberattack, driven by firm undervaluation and improvements in corporate governance. To address potential endogeneity concerns, this research employs several methods to enhance the robustness of our findings. Additionally, we observe that peer firms exhibit heightened repurchase activity in response to cyberattacks. Our heterogeneity analysis further reveals that finance, services, and high-tech firms are exceptionally responsive to cyberattacks, significantly increasing repurchase activity. Results also find that firms in states with lower economic policy uncertainty and those with more substantial financial performance are more likely to engage in share repurchases.