The Influence Of Internet Security Breach Announcements On Company's Market Value

With the continuous development of information technology and the popularity of personal computers, more and more companies use the Internet to obtain convenience and high efficiency in business. Not only the pure Internet company, the electronic commerce company, but also the traditional company who use the internet for management, all depend on the Internet. Although such technology offers several potential benefits,including improving efficiency and reducing costs, it exposes firms to new risks such as Internet-related security reaches. A US Federal Bureau of Investigation (FBI) report indicates that almost all the Fortune 500 companies have experienced an Internet-related cyberattack. Typically, firms recognize that Internet security breaches can both hinder their ability to provide the desired level of service to their customers and cause economic losses. However, costs extend beyond these, including lawsuits, loss of reputation, and mandated regulatory reforms. One type of economic loss that hasn't received much attention is that of market value. As domestic data is difficult to obtain, there is no relevant domestic research and literature. The United States worked on the study on the information security incidents from the 90s of last century, the previous researches'results mainly focused on the type of company, the type of information security attacks,the size of the company and other factors which will impact the capital market response.Therefore, in view of the frequent Internet events, this article studies the impact of information security events on the company's shares.The main content of this paper is the reaction of the capital market to the information security incident. At the same time, it discusses the influence of the factors such as the size of the company, the number of days of the event, the type of the company, the type of network attack and so on. After the network attack, the company's shares price will be affected by the events and fluctuated. The factors such as company size will play an important role in deciding the influence of such events. The innovation of this paper is to introduce the manager's attentiveness of the company to study its impact on the cumulative abnormal return, which gives the company management policy standards. We know that information disclosure of listed companies is not only an important basis for the capital market, but also an important guarantee for the effectiveness of the market. So timely voluntary disclosure will reduce the negative impact of the negative information on the company's stock. In this article, manager's attentiveness refers to the days from when the information security incidents occur to when the company announces the announcement. In the process of calculating the impact of information security events,this paper uses the research method of event study, and obtains the cumulative abnormal return in the specific event window. Then we use the regression analysis method to try different regression models, and introduce the interactive variables to get the influence of each factor on the cumulative abnormal income. According to the final regression results,combined with how the companies deal with the actual situation of such events, this paper gives the company's management policy recommendations. As the domestic financial market development time is short, the information disclosure system is imperfect,involving the company's disclosure strategy, the company's intentional concealment will greatly affect the stock price fluctuations, the occurrence of such events, the company's data is difficult to collect. So we collect the data from 2010 to 2016 years occurred in the US listed companies which involved with the information security incidents.