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Examination of cybercrime and its effects on corporate stock value

Katherine Taken Smith (Department of Management and Marketing, Texas A&M University Corpus Christi, Corpus Christi, Texas, USA)
Amie Jones (Murray State University Arthur J. Bauernfeind College of Business, Murray, Kentucky, USA)
Leigh Johnson (Murray State University Arthur J. Bauernfeind College of Business, Murray, Kentucky, USA)
Lawrence Murphy Smith (Department of Accounting, Texas A&M University Corpus Christi, Corpus Christi, Texas, USA)

Journal of Information, Communication and Ethics in Society

ISSN: 1477-996X

Article publication date: 18 October 2018

Issue publication date: 8 March 2019

2247

Abstract

Purpose

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/approach

Financial 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.

Findings

Stock prices were negatively affected in all time periods examined, significantly so in one period.

Practical implications

This 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/value

This is an original manuscript that adds to the literature regarding cybercrime and preventive measures.

Keywords

Citation

Smith, K.T., Jones, A., Johnson, L. and Smith, L.M. (2019), "Examination of cybercrime and its effects on corporate stock value", Journal of Information, Communication and Ethics in Society, Vol. 17 No. 1, pp. 42-60. https://doi.org/10.1108/JICES-02-2018-0010

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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