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Examination of cybercrime and its effects on corporate stock value

Examination of cybercrime and its effects on corporate stock value Cybercrime is a prevalent and serious threat to publicly traded companies. Defending company information systems from cybercrime is one of the most important aspects of technology management. Cybercrime often not only results in stolen assets and lost business but also damages a company’s reputation, which in turn may affect the company’s stock market value. This is a serious concern to company managers, financial analysts, investors and creditors. This paper aims to examine the impact of cybercrime on stock prices of a sample of publicly traded companies.Design/methodology/approachFinancial data were gathered on companies that were reported in news stories as victims of cybercrime. The market price of the company’s stock was recorded for several days before the news report and several days after. The percentage change in the stock price was compared to the change in the Dow Jones Industrial average to determine whether the stock price increased or decreased along with the rest of the market.FindingsStock prices were negatively affected in all time periods examined, significantly so in one period.Practical implicationsThis paper describes cases concerning cybercrime, thereby bringing attention to the value of cybersecurity in protecting computers, identity and transactions. Cyber security is necessary to avoid becoming a victim of cybercrime. Specific security improvements and preventive measures are provided within the paper. Preventive measures are generally less costly than repairs after a cybercrime.Originality/valueThis is an original manuscript that adds to the literature regarding cybercrime and preventive measures. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Information, Communication and Ethics in Society Emerald Publishing

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1477-996X
DOI
10.1108/jices-02-2018-0010
Publisher site
See Article on Publisher Site

Abstract

Cybercrime is a prevalent and serious threat to publicly traded companies. Defending company information systems from cybercrime is one of the most important aspects of technology management. Cybercrime often not only results in stolen assets and lost business but also damages a company’s reputation, which in turn may affect the company’s stock market value. This is a serious concern to company managers, financial analysts, investors and creditors. This paper aims to examine the impact of cybercrime on stock prices of a sample of publicly traded companies.Design/methodology/approachFinancial data were gathered on companies that were reported in news stories as victims of cybercrime. The market price of the company’s stock was recorded for several days before the news report and several days after. The percentage change in the stock price was compared to the change in the Dow Jones Industrial average to determine whether the stock price increased or decreased along with the rest of the market.FindingsStock prices were negatively affected in all time periods examined, significantly so in one period.Practical implicationsThis paper describes cases concerning cybercrime, thereby bringing attention to the value of cybersecurity in protecting computers, identity and transactions. Cyber security is necessary to avoid becoming a victim of cybercrime. Specific security improvements and preventive measures are provided within the paper. Preventive measures are generally less costly than repairs after a cybercrime.Originality/valueThis is an original manuscript that adds to the literature regarding cybercrime and preventive measures.

Journal

Journal of Information, Communication and Ethics in SocietyEmerald Publishing

Published: Mar 8, 2019

Keywords: Business ethics; Computer ethics; Financial information; Cybercrime; Computer security; Stock value

References