Vulnerabilities and Stock Value

Study: Flaw disclosure hurts software maker’s stock
Robert Lemos, SecurityFocus 2005-06-06
http://securityfocus.com/news/11197

The study analyzed the release of 146 vulnerabilities and found that a software company’s stock price decreased 0.63 percent compared to the tech-heavy NASDAQ on the day a flaw in the firm’s product is announced. The study assumed that the stock of a company would have the same trend as the stock index, and that any departure from the index would be due to the disclosure.

This exact research project has been on my ‘to-do’ list for years, glad to see someone has begun to analyze this. A few years back, Ted Bridis noted that Microsoft’s stock dropped several dollars the day or two after a world wide worm infestation that exploited MS products. There was also talk of Internet Security Systems’ (ISS) stock value taking a hit after the Witty worm (which exploited one of their products).

It will be extremely interesting to see this research carried further, noting details of the type of information disclosure (full, partial, vague), if the information is released in conjunction with vendors, etc.


Impact of Software Vulnerability Announcements on the Market Value of Software Vendors ~V an Empirical Investigation (pdf) (slides)

The Register Article – Study: Flaw disclosure hurts software makers’ stock

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