The reputational contagion effects of ransomware attacks

Little research examines investor attention outcomes spreading between firms through partial ownership, without additional business or industry linkages, including the spread of investor attention reactions to firms that are competitors to those firms having ownership stakes in impacted firms. We take advantage of the recent Colonial Pipeline ransomware attack, evidencing reputational contagion from firms impacted directly by reputation events to firms that are competitors of the firms that have significant ownership with the impacted firm, but otherwise no other industrial overlaps. Our results suggest investor attention events have greater breadth of impact than previously realized.

Automated summary

Little research has been conducted on the spreading of investor attention outcomes between firms through partial ownership without additional business or industry linkages. This study takes advantage of the recent Colonial Pipeline ransomware attack to demonstrate how reputational contagion occurs between impacted firms and their competitors that have significant ownership with the impacted firm.