Keywords: Insider trading, Peer firm, Cyberattack, Cyber risk, Social network, Nonworkplace tie, Nonboard tie, Private information
JEL Classification: G14, G18, G32, G38
학회소식
[2022년 5차 CAFM2022]Profiting from Rival Firms’ Cyberattacks: Evidence from Informed Trading by Insiders with Social Ties
작성자 : 관리자
조회수 : 1311
게시일 :
2022-12-20
We examine a new, attenuated type of informed trading in which insiders exploit private information transmitted via their ties to rival firms’ insiders. We find that insiders earn abnormal profits by trading their firms’ stocks before the disclosure of rival firms’ cyberattacks, particularly when their firms and rivals are exposed to higher cyber risk. Social networks formed through nonworkplace and nonboard ties are the main sources of trading profits. The litigation risk of rivals and the information asymmetry of rivals and peer firms increase peer insiders’ trading profitability, whereas the SEC’s 2011 disclosure requirements on cybersecurity risk reduce profitability.
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