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

2. 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?

3. 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)

4. Generalizability to Today? Same results today? Still applicable today? Look at S&P 500 Returns YearStd. Dev. Total RangeHighLow S&P 500 Returns 20050.65%-1.99%8.64%1,245.041,137.50 20040.70%9.33%12.39%1,213.551,063.23 20031.08%22.32%27.99%1,111.92800.73 20021.64%-23.80%33.75%1,172.51776.76 20011.36%-10.53%29.70%1,373.73965.80 20001.40%9.3%17.20%1,527.501,264.70 19991.14%19.60%17.50%1,469.301,212.20 19981.28%26.10%25.30%1,241.80927.7 19971.14%29.70%25.00%983.8737.7 19960.74%19.90%20.90%757598.5 19950.49%34.20%26.20%621.7459.1 19940.62%1.3%8.90%482438.9 19930.54%7.40%8.90%470.9429.1 19920.61%4.20%10.60%441.3394.5 19910.89%29.60%25.30%417.1311.5 19901.00%8.0%19.90%369295.5 Note: 2005 figures through Tuesday, 10/18

5. 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?

6. 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?

7. 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?

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