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Information security breaches and IT security investments : Impacts on competitors

Title
Information security breaches and IT security investments : Impacts on competitors
Author
이상용
Keywords
Information security; Breach; Investment; Information transfer effect; Externalities; Event study
Issue Date
2019-07
Publisher
ELSEVIER SCIENCE BV
Citation
INFORMATION & MANAGEMENT, v. 56, no. 5, page. 681-695
Abstract
In current business climate, a firm's information systems security is no longer independent from the industry's broader security environment. A question arises, then, whether stock market values reflect the interdependence of security breaches and investments. In this paper, we used the event study methodology to investigate how a firm's security breaches and IT security investments influence its competitors. We collected and reviewed 118 information security breaches and 98 IT security investment announcements from 2010 to 2017. We found substantial evidence supporting our hypothesis that information security breaches do, indeed, have a competition effect: when one firm is breached, its competitors have opportunities to absorb market power. For the IT security investment announcements, however, we observed the positive externalities, or contagion effect, in play: market investors feel that the security investments made by one firm increase the security level of the entire network, and hence, competitors also get benefits. Additionally, we found that the competition effect was higher when the breaches occurred after the preceding security investments than when there were no preceding investments before the breaches.
URI
https://www.sciencedirect.com/science/article/pii/S037872061830435X?via%3Dihubhttps://repository.hanyang.ac.kr/handle/20.500.11754/160266
ISSN
0378-7206; 1872-7530
DOI
10.1016/j.im.2018.11.003
Appears in Collections:
GRADUATE SCHOOL[S](대학원) > BUSINESS ADMINISTRATION(경영학과) > Articles
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