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

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)313-327
Journal / PublicationMIS Quarterly: Management Information Systems
Volume43
Issue number1
StatePublished - Mar 2019

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 motivated us to study the impact of 526 ITC adoption announcements on the short- and long-term market value. The event study shows that such announcements result in positive market return of about US $583 million around the date of announcement. We use the calendar-time portfolio analysis (CPA) for long-term impact analysis and show that the adoption of ITC generates positive and significant average monthly return up to 1.5% with control of market risk factors in a year. Our subsampling analysis and interaction analysis show that US listing, early ITC adoption and two factor authentication may moderate the market value of ITC adopters differently. We perform 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). Our research provides quantitative evidence of financial gain resulting from adoption of ITC and aspires to raise the awareness of industrial practitioners toward ITC.

Research Area(s)

  • Calendar-time portfolio analysis, event study, firm value, identity theft, identity theft countermeasures, longterm impact, short-term impact, stock prices

Bibliographic Note

Information for this record is supplemented by the author(s) concerned.