The Effect of Internet Security Breach Announcements on Market Value: Capital Market Reactions for Breached Firms and Internet Security Developers

The main point of discussion goes into detail the problem of assessing a monetary value of information technology as it is difficult to measure the cost of a security breach. With a case study, it analyzes the effect of security breaches on the market value of firms who develop technology for security. The results show that by announcing an Internet security breach is correlated to having less market value as a firm, implying that there is a relationship with poor market value and announcing breaches of security. While the study goes into detail on those firms actually affected by a security breach, the effects of breaches extends also to firms that weren't breached. In fact, the market value of those developing security is positively correlated with the disclosure of breaches on other firms.