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Investigating the impact of publicly announced information security breaches on organizational performance

Author

Listed:
  • Myung Ko

    (University of Texas at San Antonio)

  • Kweku-Muata Osei-Bryson

    (Virginia Commonwelath University)

  • Carlos Dorantes

    (University of Texas at San Antonio)

Abstract

This paper examines the impact of information security breaches on organizational performance. Up to now, there are only a few previous studies that investigated the stock market reaction of security breaches over a few days from the announcement. Using a matched sample comparison group, we incestigated the impact of information security breaches on breached firms' performance over a period of four quarters from the public announcement and examined whether breached firms perform worse than before the breach or worse than their peer firms in the industry.The result of our study to counter to initial expectations, suggesting that for some of performance measures of the breached firm were better ag=fter the breach than for the corresponding pre-breach period and also the treatment outperformed their peer firms in the indistry for the most of performance measures. Thus, although the market value of the breached firm might drop temporarily as indicated in the previous event studies, it did not impact on its financial performance over the longer periods of time, at least, over four quarters as shown in our study. Our Study also includes some important implications for managers and stock market investors.

Suggested Citation

  • Myung Ko & Kweku-Muata Osei-Bryson & Carlos Dorantes, 2007. "Investigating the impact of publicly announced information security breaches on organizational performance," Working Papers 0007, College of Business, University of Texas at San Antonio.
    • Handle: RePEc:tsa:wpaper:0026is
    as

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    File URL: http://interim.business.utsa.edu/wps/IS/0007IS-301-2007.pdf
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    References listed on IDEAS

    as
    1. Dasgupta, Susmita & Laplante, Benoit & Mamingi, Nlandu, 1998. "Capital markets responses to environmental performance in developing countries," Policy Research Working Paper Series 1909, The World Bank.
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    More about this item

    Keywords

    Information security; impact; security breach; organizational performance;
    All these keywords.

    JEL classification:

    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management

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