Discussion of: Market Reaction to E-commerce Impairments Evidenced by Website Outages Vern Richardson University of Arkansas

Contributions of this paper Carr’s (2003) arguments – May not get a competitive advantage from IT – Vulnerabilities still critical – this paper addresses that issue. Challenge to authors is to look at this in terms of 4 th quarter 2005 and for non dot- com companies. – Will it change anyone’s thinking when it is published?

Stock Market Reaction to E-commerce Announcements ‑ 1 to +1 ‑ 5 to +5 ‑ 10 to +10 4Q1998 E-commerce Ann. (N = 244)4.57%9.65%19.64% 4Q2000 E-commerce Ann. (N = 542) ‑ 1.86% ‑ 6.43% ‑ 10.11% All significant at 0.01 level Source: Dehning, et al., 2004 and indirectly Subramani and Walden (2001)

Generalizability to Today? Same results today? Still applicable today? Look at S&P 500 Returns YearStd. Dev. Total RangeHighLow S&P 500 Returns %-1.99%8.64%1, , %9.33%12.39%1, , %22.32%27.99%1, %-23.80%33.75%1, %-10.53%29.70%1, %9.3%17.20%1, , %19.60%17.50%1, , %26.10%25.30%1, %29.70%25.00% %19.90%20.90% %34.20%26.20% %1.3%8.90% %7.40%8.90% %4.20%10.60% %29.60%25.30% %8.0%19.90% Note: 2005 figures through Tuesday, 10/18

Motivation Motivation given is that no one else has done this! Surprised? Different from expectations? – Signal is stronger than noise Incremental Contribution? Whose behavior needs to change? Who needs to know the results of this study today?

Triangulation of Results Issue with event study – ex ante prediction of potential affect on firms Does an impairment actually affect revenues – can you capture that? – See it in Retail firms – via monthly sales? – Have anecdotal evidence, does it show in the statistics as well? Nielsen Net Ratings – measure effect on: – Hits (Both during that period and after) – Stickiness – how long do they stay? – Repeat Customers or most profitable customers? How about long-run returns?

Smaller Questions Overlapping Beta Estimations? – Test for robustness using market-adjusted returns Appropriate Market Index? – Is CRSP index most appropriate or would NASDAQ or ISDEX be better for this sample? Dollar amount per-share less relevant? – Millions of dollars in market capitalization better? Really persistence? Long-lived returns?

Summary Generalizability to today? Adequate motivation? Incremental contribution? Possibility of triangulating results? Correct market index? Really persistent? Future work