Cybersecurity
The Market Knew About the Press Release Hackers Before the Cops
- Researchers studied stock sensitivity to stolen information
- Trading in hacked companies twice as predictive as normal
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Can stock traders tell when something fishy is going on in the market? Researchers who studied scandals in which hackers used inside information to profit from earnings announcements say: yes.
To see how sensitive markets are to hidden influences, three professors set out to measure how quickly traders picked up on the activity of crooks who used stolen data to front-run earnings releases in about 800 companies. Very quickly, was their conclusion, published in an April 3 paper, “Retail Insider Trading and Market Price Efficiency: Evidence from Hacked Earnings News.”