Catching the Bug : Cyberattack Spillovers on Stakeholder Firms

I examine how cyberattacks affect the wealth, operational performance, and business strategies of non-targeted joint venture/strategic alliance partners, suppliers, and customers. Cyberattacks are associated with large losses in stakeholder value around attack announcements. Contrary to expectations, I find that, on average, cyberattacks do not tend to adversely affect stakeholder firms over the long term. Instead, managers appear to make temporary changes that help protect their firms from potentially adverse spillovers that they later reverse. However, responses vary based on the nature of information lost from the attack and the potential damage the events may inflict on the stakeholder relationship with the target. Lastly, suppliers are more likely to retain their relationship with targeted customers post-attack, and this effect is potentially driven by their reliance on relationship-specific investments. In contrast, other stakeholders do not make adjustments to their supply chains