The effect of computer virus outbreaks on anti-virus companies

Sunil K. Shrestha The George Washington University
John R. Harrald The George Washington University
Sonia Schmitt The World Bank Institute

This paper presents financial performance of anti-virus companies based on computer virus occurrence, computer virus threat level, and R & D strategy. The purpose of this paper is to investigate the impact of occurrence of new computer viruses and computer virus threat level on anti-virus software R & D strategy and financial performance of anti-virus companies. Computer viruses adversely impact business continuity because they allow unapproved access to the systems and application can be written to perform destructive action.

International Computer Security Association (ICSA) Labs 8th Annual survey has determined that 1.2 million virus incidents occurred in more than 900,000 computers in the year 2002. The computer virus incidents jumped 140% in the year May 2000 - May 2001 from the previous year. Several anti-virus companies have been actively involved in developing anti-virus software to control the outbreak of computer viruses. There has not been adequate research done that determines the correlation between computer virus occurrence and financial performance of anti-virus companies; computer virus threat level and financial performance of anti-virus companies; and between the R & D strategy and financial performance of anti-virus companies.

Data used in this analysis are ratio scale data. It uses three independent variables (computer virus occurrence, virus threat level and R & D strategy) and three dependent variables (anti-virus company stock price, revenue and R & D cost). This paper uses data from 1998 to 2003. Data analysis is performed to identify correlation between dependent and independent variables. Since financial data represent ratio scale, parametric statistical analysis technique t test is used to analyse data. This paper focuses on four large anti-virus companies, but the analysed results can be generalized for the entire anti-virus software market because these four companies take 98% of the anti-virus software market share.



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