Audit Strategies and Multiple Fraud Opportunities of Misreporting and Defalcation*

We examine how an auditor assesses the risk of fraud and formulates an audit plan when the auditee has the opportunity to commit various types of fraud. Unlike previous studies, the audi‐tee can misappropriate assets (defalcation), misreport financial information (fraudulent financial reporting), or misreport financial information in combination with defalcation. Our results identify four possible equilibria whose characteristics depend on the auditee's relative rewards and penalties from the various types of fraud, the cost of audit effort, and expectations about the auditee‐firm's performance. When the cost of audit effort is sufficiently small, fraud risk assessment depends on the auditee's rewards and penalties associated with each type of fraud, but not on the auditor's beliefs about firm performance. The auditor develops an audit plan that focuses on the type of fraud the auditee is most motivated to commit, and in turn, the audit plan deters all other types of fraud.     

Volume and turn-of-the-year behavior

This paper studies the trading characteristics of listed companies by size, and year-end behavior. There were no transactions on nearly 25% of the days for the smallest decile even at the turn of year which is an active trading period for small companies. As a result of low levels of trading and the regulations governing exchange specialists, transaction prices and quotations of small listed companies may require several days to fully reflect equilibrium price changes. The data confirm the existence of a year-end seasonal pattern in rates of return for small companies and suggest that there may be a seasonal pattern for large companies as well.     

Experimental bias: Task,tools, and time

In any experiment, control over all possible variables affecting the response is rarely, if ever, possible. Even in a laboratory setting it is difficult to control all variables which might conceivably affect the outcome. This study identifies three variables—task relevancy, tool availability, and time allocation as variables which have potentially reactive effects in laboratory experiments. The authors gratefully acknowledge the helpful comments of Gerald Albaum and Donald Messmer.     

Defined contribution health plan to consumer driven health benefits: evolution and experience

Today, the idea of placing more choice on employees "consuming" health care and giving them more responsibility and incentive to control health care costs and utilization is alive and thriving in the form of consumer-driven health care. This article examines the evolution of consumer-driven health benefits--including the experience of the first generation of "defined contribution" health care participants (i.e., retirees) and the results of different approaches employers have taken to early consumer-driven plan designs. The author then describes what's needed to answer the question: "Can consumer-driven health care control health cost?"     

Information sources used by older adults for decision making about tourist and travel destinations

Over the past decade, the older market has emerged as an extremely important one because of its increased purchasing power for most consumer goods and services. The tourism and leisure industry is also targeting people aged 65 years and older, because many possess a relatively large share of discretionary money that they want to spend on travel. This has resulted in increasing attention by the mass media and the advertising industry in particular. This paper discusses the main types of information sources that are used by older adults when they make decisions about tourist and travel destinations, and particularly focuses on the importance of word‐of‐mouth sources and personal experiences. It also explores the influence of the mass media on trip decision making for older adults, and discusses the importance of brochures, magazines and television as information sources for older adults. Finally, it critiques the lack of senior models in advertising campaigns for travel products that are aimed at the older market.     

Volatility,global information,and market conditions: a study in futures markets

This study examined the behavior of return volatility in relation to the timing of information flow under different market conditions influenced by trading volume and market depth. We emphasized information flow during trading and nontrading periods that may represent domestic and offshore information in the global trading of currencies. Test results show that volatility was negatively related to market depth; that is, deeper markets had relatively less return volatility. Additionally, the effect that market depth had on volatility was superseded by information within trading volume. Test results focusing on the timing of information flow reveal that in low‐volume markets, the volatility of nontrading‐period returns exceeded the volatility of trading‐period returns. However, when trading volume was high, this pattern was reversed and conformed to the observations of earlier articles. Our findings proved to be robust across time, different currency markets, and different measures of return volatility. We also observed a trend toward greater integration between foreign and U.S. financial markets; the U.S. market increasingly emphasized information from nontrading periods to supplement information arriving during trading periods. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21:173–196, 2001