Cybersecurity risk and corporate innovation
Lattanzio G. Ma Y.
October 2023Elsevier B.V.
Journal of Corporate Finance
2023#82
Using a text-based metric of firms ex-ante exposure to cybersecurity risk, we document that the rise of cyber threats is redesigning corporate innovation and appropriation strategies. As firms exposure to cybersecurity risk increases, managers reliance on trade secrets declines, as they seek to protect their firms intellectual capital under the umbrella provided by patent and intellectual property laws. In particular, we document that firms exposed to cyber threats file for simpler patents to accelerate their innovation cycle. This strategic adjustment is not costless, as it causes firms returns to research and development (R&D) investments to decline significantly.
Corporate innovation , Cyber risk , Hacking , Patents , Trade secrets
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Nazarbayev University, Graduate School of Business, Department of Finance, Turan Ave, Nur-Sultan, 0200000, Kazakhstan
The University of Oklahoma, Price College of Business, Department of Accounting, 307 West Brooks, Norman, 73019, OK, United States
Nazarbayev University
The University of Oklahoma
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