Paper: arXiv 2512.06144
Authors: Maxwell Block
Abstract
This study examines short-term market responses to material cybersecurity incidents disclosed under Item 1.05 of Form 8-K. Drawing on a sample of disclosures made between 2023 and 2025, daily stock price movements were evaluated over a standardized event window surrounding each filing. On average, companies experienced negative price reactions following the disclosure of a material cybersecurity incident. Comparisons across company characteristics indicate that smaller companies tended to incur more pronounced declines, while differences by sector and beta were not evident. These findings offer empirical insight into how public markets interpret cybersecurity risks when they are formally reported and suggest that firm size may influence the degree of sensitivity to such events.
Complexity vs Empirical Score
- Math Complexity: 1.5/10
- Empirical Rigor: 4.5/10
- Quadrant: Philosophers — conceptual discussion, limited math and data
Why this score: The paper provides a timely empirical analysis of stock price reactions to recent SEC Form 8-K Item 1.05 cybersecurity disclosures. While clear and reproducible using public Python libraries, the methodology relies on basic basic statistical tests without accounting for market risk adjustments (e.g., benchmark returns or CARs) or controlling for confounding factors.
Research Flowchart
flowchart TD
A[Research Goal: Assess market reaction to Form 8-K Item 1.05 cybersecurity disclosures] --> B[Data Collection: Form 8-K Item 1.05 filings & stock prices 2023-2025]
B --> C[Event Study Methodology: Evaluate daily stock prices over standardized event window]
C --> D[Cross-Sectional Analysis: Compare price impacts by firm size, sector, and beta]
D --> E[Finding 1: Overall negative short-term stock price reaction to disclosures]
D --> F[Finding 2: Smaller firms experience more pronounced price declines]