Adoption of identity theft countermeasures and its impact on market value of global firms

Abstract

Identity thefts have long plagued the e‐commerce industry. Many companies have considered adopting relevant countermeasures. Using the event study methodology, this research analyzes the returns of investment of such adoption. The research results show that announcements associated with US companies and the financial services industry are rewarded more generously by investors. This research may contribute to the understanding of market return of adoption of anti‐identity theft measures and thus facilitate industrial practitioners to make better investment decisions about such measures. Apart from traditional CAPM model, which has been widely adopted in the IS literature, we also use the Fama‐French 3‐factor model and another model that considers global market movements to support the findings. This research aims to enrich the growing event study literature in the IS area and provide useful guidelines regarding adoption of anti‐identity theft measures for companies.