Developing the marketing concept in public accounting firms

As the American Institute of Certified Public Accounts relaxes its practice development restrictions, CPA firms find themselves with a need to develop more aggressive approaches to the markets they serve. This paper focuses on the development of a marketing strategy for an illustrative market, that of small, rapidly-growing high technology firms. Results from a telephone survey of company executives serve as the basis for strategy development. In addition, the evaluation of a small firm and its accounting needs are provided in a hypothetical example to dramatize the conclusions. The results suggest that the burden may be on CPA firms to anticipate, recognize, and meet the accounting needs of their clientele.     

Transparency in the Mortgage Market

This paper studies the impact of transparency in the mortgage market on the underlying real estate market. We show that geographic transparency in the secondary mortgage market, which implies geographic risk based pricing in the primary market, can limit risk-sharing and make house prices more volatile. Ex ante, regions prefer opaque markets to enable insurance opportunities. We discuss the implications for risk based pricing and house price volatility more generally. In addition, we investigate the specific conditions under which competitive lenders would optimally choose to provide opaque lending, thus reducing volatility in the real estate market. We show that in general the opaque competitive equilibrium is not stable, and lenders have incentive to switch to transparent lending if one of the geographic regions has experienced a negative income shock. We propose market and regulatory mechanisms that make the opaque competitive equilibrium stable and insurance opportunities possible.