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Asset redeployability and the market reaction to cyberattacks

Author

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  • Harris, Oneil
  • Nguyen, Trung

Abstract

We examine how asset redeployability affects the market's response to cyberattacks. There is a robust positive relationship between the announcement returns and redeployable assets, and the correlation is stronger in firms that engage in fewer real activities manipulations and those with higher market share growth. Therefore, cyberattacks elicit a less negative response from investors when breached firms have more redeployable assets, as redeployability provides enhanced protection against adverse outcomes and higher liquidation values. Yet, breached firms that resort to asset sales to manipulate earnings face severe penalties. Our study underscores the value of cultivating redeployable assets for cyber risk mitigation.

Suggested Citation

  • Harris, Oneil & Nguyen, Trung, 2024. "Asset redeployability and the market reaction to cyberattacks," Finance Research Letters, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013072
    DOI: 10.1016/j.frl.2024.106278
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    More about this item

    Keywords

    Asset redeployability; Cyberattacks; Market share growth; Earnings manipulation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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