Market reaction to e-commerce impairments evidenced by website outages

This study examines the stock market reaction to announcements of website outages. Outages impair business to consumer electronic commerce, potentially resulting in significant losses to affected organizations. Anecdotal evidence suggests a negative impact of outages on the market value of the organ...

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Bibliographic Details
Published in:International journal of accounting information systems 2006-06, Vol.7 (2), p.60-78
Main Authors: Anthony, Joseph H., Choi, Wooseok, Grabski, Severin
Format: Article
Language:English
Subjects:
AI0104
BA01
Correlation analysis
E-commerce
Electronic commerce
Event study
Market value
Securities markets
Stock prices
Studies
Website outage
Websites
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Summary:This study examines the stock market reaction to announcements of website outages. Outages impair business to consumer electronic commerce, potentially resulting in significant losses to affected organizations. Anecdotal evidence suggests a negative impact of outages on the market value of the organization; however there has not been any formal empirical analysis. We find a significant negative correlation between website outage announcements and stock returns, and the correlation is increasing in the percentage of revenues earned through Internet business. We also report differential results dependent on the type of outage, but find no evidence of differential response associated with length or frequency of outages. Our findings would support significant expenditures to prevent future website outages.
ISSN:1467-0895
1873-4723
DOI:10.1016/j.accinf.2005.10.002