Private Parts: A Global Analysis of Privacy Protection Schemes and a Proposed Innovation for Their Comparative Evaluation

Given recent technological advances, we now are able to invade personal privacy as never before. The challenge in the business community is to make the most of the opportunities presented by the growth in communication technology while, at the same time, protecting what remains of individual privacy. The conflict between technological advances and privacy concerns is not new, but it has grown exponentially in recent years, and the development of a data protection scheme in the European Union lends a certain economic urgency to meeting the challenge. Pursuant to a Directive adopted by the European Union, privacy protections throughout the EU must become more stringent and consistent throughout EU member countries. One area of great concern to the United States is the Directive's requirement for certain minimum standards of privacy protection in countries receiving information from member countries. Given the limited protections available in the United States, it does not appear that the United States meets these minimum standards. The purpose of this paper is to critically analyze the existing measurements of global privacy protections and to propose a new model which allows for their comparative evaluation.     

Flypaper Unstuck: Comment on Dixon, Picton and Rimmer

Commonwealth general revenue grants to the States are substitutes for State taxes, and should be spent by the States. If preferences vary, then differences in State spending are not evidence of flypaper effects.     

Framing the decision to buy long-term care insurance: losses and gains in the context of statistical and narrative evidence

Rational models have difficulty explaining low levels of demand for long-term care insurance. We posit that insurers have framed the need for insurance in a manner that unintentionally promotes risk-seeking behavior (i.e., high probability loss frame), and that alternative frames can better promote willingness to insure. We further posit that emotional frames are more effective than rational risk frames in promoting willingness to pay. Survey evidence supports these hypotheses: emotional narrative frames are associated with greatest willingness to pay, and the high probability loss frame was associated with among the lowest average amounts willing to pay.     

A crisis parachute: helping stock prices have a soft landing.

A company's stock price usually takes a beating when the firm faces a crisis. But a CEO can minimize the effects of a sudden lapse of investor confidence with a wise communication strategy.     

Do Clients’ Enterprise Systems Affect Audit Quality and Efficiency?

Enterprise systems (ESs) are widely used to support business processes along the enterprise value chain. It has been shown that ESs, by integrating business functions and making information about day‐to‐day activities available, enhance operational transparency and improve the internal information environment. However, while ES‐based business infrastructures can offer many benefits, their prevalence and increased complexity have also brought new challenges to external auditors. Motivated by the prominence of this issue for auditors and regulators and by the scarcity of research jointly examining ESs and auditors’ work, we investigate whether the presence and extent of client firms’ ES implementations are related to the quality and efficiency of auditors’ work. Using proprietary archival data on ES implementations and controlling for self‐selection, we find that ES implementation improves the quality and efficiency of current and future years’ audit work. Specifically, there are fewer restatements, a greater likelihood of auditors issuing going‐concern opinions to firms that do not survive, higher accruals‐based auditing quality, a lower likelihood of Form 10‐K filing delays, and generally lower audit fees. We further show that the benefits of ESs generally increase with the scope of implementation and are generally greater when the ES includes accounting and finance systems. Inconsistent with improvement in the quality of auditors’ work, we find no evidence that ESs help auditors identify material weaknesses in advance of restatement announcements and we find that, even in the presence of ESs, auditors issue an excessive number of going‐concern opinions to clients that survive.