The Effect of Cybercrime News Announcements on Stock Prices

Open Access
Wang, Kyle T
Area of Honors:
Bachelor of Science
Document Type:
Thesis Supervisors:
  • Chris Muscarella, Thesis Supervisor
  • James Alan Miles, Honors Advisor
  • cybercrime
  • cyber attack
  • finance
  • stock prices
  • stock market
  • market
  • hacking
  • hack
  • reporting
  • breach
In the 21st century, cybercrime continues to be a prevalent and rapidly evolving threat to businesses. Companies must address this key issue in order to maintain the security of their intellectual property and to stay competitive. However, due to the complexity and wide variety of cyber attacks employed, it is difficult to quantify the damage these attacks inflict on publicly-traded corporations. Based on a prior event study, observing the significance of stock price movements during the announcement of each attack may prove the best indicator of loss assessment. This thesis expands upon this prior research by examining whether shareholder attitudes toward cybercrime have changed over the past decade. The underlying hypothesis is that shareholders have become desensitized after cybercrime has lost its novelty, and that stock price movements due to cybercrime news announcements are no longer statistically significant compared to those studied in the early 2000s. After analyzing an expanded sample size of over thirty mid- and large-cap firms, I find that cyber attacks continue to cause substantial concern among investors, thus incentivizing businesses to underreport or marginalize the effects of these events to preserve shareholder value. As a whole, the data suggests that the market closely observes instances of cybercrime, thus adding another level of urgency to stakeholders such as the SEC to more clearly define the rules in the comparatively nascent world of cybercrime response and reporting protocol.