The Effect of Malicious Cyber Activity on the U.S. Corporate Sector

We compile a comprehensive dataset of cyber incidents experienced by publicly traded firms and show that firms that have government and defense contracts, work on critical infrastructures and emerging technologies, and firms that possess intellectual property face a higher cyber risk. This risk also increases after an economically linked firm suffers a cyber incident. We categorize cyber events by the harm inflicted on firms' assets and operations and show that firms suffer significant value losses across multiple cyber categories. These losses also spill over to economically linked firms. The spillover effects are likely driven by fundamentals rather than sentiment. JEL classification: G10, G12, G14, G17 Keywords: Cyberattacks, Malicious Cyber Activity, Cyber Threat Actors, Attack Vectors, Cybersecurity Initiatives, Intellectual Property Theft, Trade Secrets, Critical Infrastructures, Emerging Technologies, Defense Contracts, Government Contracts, Spillover Effects, Economically Linked Firms, Corporate Transparency
1. Introduction As the U.S. economy grew increasingly reliant on information technology, malicious cyber activity has emerged as a new threat to corporations, the government, and private citizens alike. Illegal [...]