The Business Value of Engaging in Counter-Breach Initiatives

Facing an increasing information security threat, companies react by engaging in various counter-breach initiatives. The business value of such initiatives is under-studied. This paper utilizes an organizational legitimacy view, overlaid by behavioral theory of the firm (BTOF), to examine whether counter-breach initiatives are rewarded by the market, and whether the magnitude of such rewards depends on the institutional environment. Based on a dataset of 3,212 observations from 2005 to 2015, and focusing on counter-breach initiatives that are revealed in public announcements and/or emphasized in annual reports, the results unfold an overall significant positive effect of counter-breach initiatives on Tobin’s