Information Transfer Among Internet Firms: The Case of Hacker Attacks

24 Pages Posted: 28 Oct 2002

See all articles by Michael Ettredge

Michael Ettredge

University of Kansas - Accounting and Information Systems Area

Vernon J. Richardson

University of Arkansas at Fayetteville

Date Written: September 2002

Abstract

This study focuses on the stock market reaction to denial of service attacks against certain well-known Internet firms in February 2000. Investors appear to have used several heuristics in deciding which firms were 'similar' to those attacked, and thus predicted that they were also likely to be attacked themselves in future. The primary heuristic employed appears to have been similarity in reliance on the Internet to conduct operating activities (i.e., the set of Internet firms). We find negative mean abnormal returns among Internet firms not actually attacked (i.e., information transfer). This occurred both within Internet industries in which some firms were attacked, and within Internet industries in which no firms were attacked. A secondary heuristic appears to have been that Internet firms similar in size to those attacked (i.e., relatively large) were more likely to be attacked in future. In contrast to all other Internet industries, providers of Internet security products and services experienced positive mean abnormal returns.

JEL Classification: M41, M45, G12

Suggested Citation

Ettredge, Michael L. and Richardson, Vernon J., Information Transfer Among Internet Firms: The Case of Hacker Attacks (September 2002). Available at SSRN: https://ssrn.com/abstract=334460 or http://dx.doi.org/10.2139/ssrn.334460

Michael L. Ettredge (Contact Author)

University of Kansas - Accounting and Information Systems Area ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States
785-864-7537 (Phone)
785-864-5328 (Fax)

Vernon J. Richardson

University of Arkansas at Fayetteville ( email )

401 WCOB
Fayetteville, AR 72701
United States

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