William Akoto, State sponsored cyber attacks and co movements in stock market returns

As cyber threats become increasingly central to international politics, state-sponsored cyber attacks have become an instrument of geopolitical leverage. Emerging evidence shows that states are increasingly turning to cyber industrial espionage to boost the competitiveness of domestic firms. These sophisticated and well-orchestrated attacks often target critical infrastructure systems and sensitive data, with severe ramifications for the targeted firms and the national economy.

In a new article in Business & Politics, SIS Professor William Akoto examines the broader, often overlooked ripple effects of state-sponsored cyber attacks on third-party entities like cybersecurity service providers who are frequently at the frontlines of dealing with these attacks. Leveraging data on cyber attacks and stock market returns for a sample of U.S. based cybersecurity defense contractors from 2000 to 2020, Akoto empirically demonstrates that an escalation in the intensity of state-sponsored cyber attacks prompts a behavioral shift among investors and regulators, leading to increased co-movement in firms' stock returns.

Akoto's paper thus adds a novel dimension to our understanding of the complex interplay between state-sponsored cyber attacks and the market dynamics of cybersecurity defense contractors, with important implications for national cybersecurity.

Read the full article here.