Abstract

We investigate the role of information dissemination about cyberattacks through major newswires on municipal finance. Employing a difference-in-differences approach to identify causal effects, we find that county-level cyberattacks covered by the media cause increases in new offer yields and reduce bond issuance. Heterogeneous effects related to investor clientele suggest a capital supply channel. Municipalities respond to financing shortages by drawing their cash holdings and reducing their more elastic investments. Overall, awareness of cybersecurity risk hinders municipalities’ access to capital and restricts their ability to provide public services and infrastructure.

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• Keyword(s):
• finance 247

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