Disclosure Under Threat: Evidence from Peer Cyber Breaches

Cybersecurity incidents rarely remain confined to the attacked firm. This study investigates whether cybersecurity incidents at industry peers generate spillover effects that shape corporate disclosure of unaffected rival firms. Based on a sample of U.S. firms from 2006 to 2022, we empirically show that greater exposure to peer cyber breaches deters non-breached firms from issuing management guidance. Crucially, this reduction reflects a strategic maneuver rather than mere caution: managers selectively suppress negative forecasts while continuing to disseminate positive news, which the market rewards with stronger announcement reactions during periods of industry-wide cyber turbulence. Moreover, the forecasts by non-breached firms tend to cover longer horizons and exhibit lower precision and accuracy, suggestive of a deteriorating information environment. These disclosure contractions are most pronounced when the expected costs of disclosure are high. Finally, although strategic silence yields short-term valuation benefits, it also presages higher future stock price crash risk.