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Adoption of Identity Theft Countermeasures and Its Short- and Long-Term Impact on Firm Value
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2019 | Management Information Systems Quarterly | Citations: 0
Authors: Bose, Indranil; Leung, Alvin Chung Man

Abstract: Identity theft has impaired e-commerce. To combat the crime, many identity theft ... Expand

Abstract: Identity theft has impaired e-commerce. To combat the crime, many identity theft countermeasures (ITC) have been proposed. As investments in ITC are substantial and the benefits of such investments are intangible, companies are often hesitant to adopt such measures. This was the motivation for this study of the impact of 526 ITC adoption announcements on short- and long-term market value. The event study shows that such announcements result in positive market return of about U.S. $583 million around the date of announcement. Calendar-time portfolio analysis (CPA) is used for the long-term impact analysis and shows that the adoption of ITC generates positive and significant average monthly return up to 1.5% with control of market risk factors in two years. Subsampling analysis and interaction analysis show that U.S. listing, early ITC adoption, and two-factor authentication may moderate the market value of ITC adopters differently. A number of robustness checks (e.g., Heckman model, cross-sectional regression on Tobin’s Q, firm-specific risk factor analysis, subsampling analysis by ICT development, and analysis of security statements in annual reports) are performed. The research provides quantitative evidence of financial gain resulting from adoption of ITC and aspires to raise ITC awareness among industrial practitioners. Collapse

Semantic filters: one-time password

Topics: multi-factor authentication identity theft data security IT investment organizational value

Methods: longitudinal research event study cross sectional research robustness check nonparametric test

Theories: cue utilization theory capital asset pricing model
The impact of adoption of identity theft countermeasures on firm value
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2013 | Decision Support Systems | Citations: 25
Authors: Bose, Indranil; Leung, Alvin Chung Man

Abstract: Identity theft poses a huge threat to the e-commerce community. Although the cri ... Expand

Abstract: Identity theft poses a huge threat to the e-commerce community. Although the crime is a growing menace, firms are uncertain about the payoffs obtained from adoption of identity theft countermeasures. As the cost of implementation of relevant countermeasures is high, senior managers are hesitant to make such investments. Using the event study method, we empirically demonstrate that it is worthy for a firm to adopt such countermeasures. We show that the news of such adoption increases the short term market value of the announcing firm by 0.63% on an average. Our research also finds that early adopters, adopters of sophisticated identity theft countermeasures, firms with high growth potential, and firms with high credit rating show a strong and positive return in market value, whereas small firms demonstrate a moderate but positive reaction. As shown in our research findings, the market rewards early adopters of security technology and adopters of sophisticated measures greatly. To reap the market premium, the industrial practitioners should adopt newer identity theft countermeasures at an earlier time. Furthermore, our study shows that investors reward growing firms and small companies more if they adopt the countermeasures. This shows that the market views the investment in anti-identity theft as a tool to enhance competitive advantage. Our research findings should encourage firms to adopt identity theft countermeasures more proactively. Collapse

Semantic filters: one-time password

Topics: multi-factor authentication information technology capability identity theft data security digital signature

Methods: parametric test event study longitudinal research nonparametric test statistical hypothesis test

Theories: dynamic capabilities theory

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Adoption of Identity Theft Countermeasures and Its Short- and Long-Term Impact on Firm Value

The impact of adoption of identity theft countermeasures on firm value