Asset redeployability and the market reaction to cyberattacks

Oneil Harris and Trung Nguyen

Finance Research Letters, 2024, vol. 70, issue C

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.

Keywords: Asset redeployability; Cyberattacks; Market share growth; Earnings manipulation (search for similar items in EconPapers)
JEL-codes: D22 G30 G31 G32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013072

DOI: 10.1016/j.frl.2024.106278

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