APJIS Asia Pacific Journal of Information Systems

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The Journal for Information Professionals

Asia Pacific Journal of Information Systems (APJIS), a Scopus and ABDC indexed journal, is a
flagship journal of the information systems (IS) field in the Asia Pacific region.

ISSN 2288-5404 (Print) / ISSN 2288-6818 (Online)

Editor : Hee-Woong Kim

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Current Issue

Date June 2020
Vol. No. Vol. 30 No. 2
DOI https://doi.org/10.14329/apjis.2020.30.2.328
Page 328~352
Title Investigating the Impact of IT Security Investments on Competitor’s Market Value: Evidence from Korea Stock Market
Author Young Jin Kwon, Sang-Yong Tom Lee
Keyword IT Security Investment, Competitors, Market Reaction, Event Study, Information Transfer Theory, Korea Stock Market
Abstract If a firm announces an investment in IT security, how the market value of its competitors reacts to the announcement? We try to shed light on this question through an event study design. To test the relationship, we collected 143 announcements on cybersecurity investment and measured the subsequent impact on 533 competitors’ abnormal returns, spanning from 2000 to 2019. Our estimation results present that, on average, the announcements have no observable impact on the market value of announcing firms and competitors as well, which is consistent with findings of a prior study. Interestingly, however, the impact becomes evident when we classify our samples by industries (Finance vs. non-Finance or ICT vs. non-ICT) and firm size (Big vs. Small). We interpret our empirical findings through the lenses of contagion effect and competition effect between announcing firms and their competitors. Key finding of our study is that, for financial service firms, the effect resulting from the announcement on cybersecurity investment transfers to competitors in the same direction (i.e., contagion effect).


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