The Value of Security Audits, Asymmetric Information and Market Impact of Security Breaches

This dissertation includes two essays on the economic aspects of information security. The first essay presents a principal-agent model for assessing the value of information security audits. The issue of information security investments is confounded by control problems arising from asymmetric information and conflicting managerial interests within the firm. By analyzing the impacts of asymmetric information and security audits, this study extends the literature in three ways. First, the degree of information asymmetry is formally measured, which allows one to study how different levels of information asymmetry affect information security investment decisions. Second, the intensity of an information security audit is explicitly modeled, and the interactions between information asymmetry ... Author: Zhou, Lei Source: University of Maryland Download Link: Click Here To Download This Report (PDF) Reference URL 1: Visit Now Reference URL 2: Visit Now … [Read more...]

TO TELL OR NOT TO TELL: MARKET VALUE OF VOLUNTARY DISCLOSURES OF INFORMATION SECURITY ACTIVITIES

This study measures the economic consequences of information security activities, in general, and more specifically the market value of disclosures of information security activities. Since information security activities are primarily non-revenue generating, management tends to view them as the cost-of-doing-business, with no impact on firm value. Furthermore, managers are reluctant to share the details, because that they do not want to attract the attention of hackers. However, voluntary disclosures of information security can help reduce information asymmetry, which leads to belief revisions by investors, and hence corrects the misspecifications (if any) of the firm's market value... Author: Sohail, Tashfeen Source: University of Maryland Download Link: Click Here To Download This Report (PDF) Reference URL 1: Visit Now Reference URL 2: Visit Now … [Read more...]

Information in the Marketplace: Two Essays on Firm Strategies and Stakeholder Perceptions

This dissertation consists of two essays that examine the role of information exchange in the marketplace and how firm strategies shape stakeholder perceptions of this information. In Essay 1, I develop a theoretical framework of Perceived Information Quality (PIQ), the extent to which stakeholders consider information useful in their evaluations of firm behavior. As PIQ increases, stakeholders' information asymmetry and evaluation costs decrease, thereby potentially leading to more transactions between the firm and its stakeholders, greater access to resources for the firm, and ultimately, a greater probability of the firm achieving economic success. However, stakeholders may perceive certain types of information about the firm to be more useful than others... Author: Pfarrer, Michael D. Source: University of Maryland Download Link: Click Here To Download This Report (PDF) Reference URL 1: Visit Now Reference URL 2: Visit Now … [Read more...]

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