Cybersecurity Risk



Florackis, Chris, Louca, Christodoulos, Michaely, Roni and Weber, Michael
(2022) Cybersecurity Risk. The Review of Financial Studies, 36 (1). pp. 351-407.

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Abstract

<jats:title>Abstract</jats:title><jats:p>Based on textual analysis and a comparison of cybersecurity risk disclosures of firms that were hacked to others that were not, we propose a novel firm-level measure of cybersecurity risk for all U.S.-listed firms. We then examine whether cybersecurity risk is priced in the cross-section of stock returns. Portfolios of firms with high exposure to cybersecurity risk outperform other firms, on average, by up to 8.3$\%$ per year. Yet, high-exposure firms perform poorly in periods of high cybersecurity risk. Reassuringly, the measure is higher in information-technology industries, correlates with characteristics linked to firms hit by cyberattacks, and predicts future cyberattacks.</jats:p><jats:p>Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online</jats:p>

Item Type: Article
Additional Information: Source info: CESifo Working Paper No. 8760
Divisions: Faculty of Humanities and Social Sciences > School of Management
Depositing User: Symplectic Admin
Date Deposited: 29 Mar 2022 07:30
Last Modified: 24 Feb 2024 08:31
DOI: 10.1093/rfs/hhac024
Related URLs:
URI: https://livrepository.liverpool.ac.uk/id/eprint/3151633