Privacy in E-Commerce: Development of Reporting Standards, Disclosure and Assurance Services in an Unregulated Market

Journal of Accounting Research, Vol. 41, Issue 2, pp. 285-309, 2003

University of Alberta School of Business Research Paper No. 2013-685

Yale ICF Working Paper No. 02-17

41 Pages Posted: 13 May 2002 Last revised: 1 Jun 2014

See all articles by Karim Jamal

Karim Jamal

University of Alberta - Department of Accounting, Operations & Information Systems

Michael S. Maier

University of Alberta - Alberta School of Business

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2002

Abstract

Government regulation of financial reporting by publicly listed firms, coupled with a punitive regime for violation of Generally Accepted Accounting Principles (GAAP) has been in place in the United States for seven decades. Whether this regime is effective or useful is an open question, especially in the absence of data on the behavior of unregulated economies. Privacy disclosure in e-commerce is essentially an unregulated environment with some parallels to financial disclosure. A study of privacy standards, disclosures practices and demand for audits can help accountants and security regulators project the consequences of a competitive regime sans regulation for accounting standards, disclosure and audit practices.

In this paper we set up a framework for such a study, gather data from the field, and analyze privacy standards, privacy disclosure practices, and the effectiveness of opt-out practices of one hundred high traffic e-commerce websites. We observe four diverse sets of privacy standards (Truste, BBB Online, WebTrust and PWC Privacy) competing in this market, attracting clienteles of their own as reflected in privacy policies and the disclosure of such policies. With a few exceptions, actual disclosure and opt-out practices correspond reasonably well to stated policies in e-commerce. There is little evidence that the prevailing competitive regime induces a race to the bottom with respect to privacy standards and disclosures. We explore the implications of these results for the consequences of a competitive regime for regulation of financial reporting.

Keywords: E-commerce, Privacy, Regulatory Competition, Reporting Standards

JEL Classification: G38, K22, L51, L86, M41

Suggested Citation

Jamal, Karim and Maier, Michael and Sunder, Shyam, Privacy in E-Commerce: Development of Reporting Standards, Disclosure and Assurance Services in an Unregulated Market (October 1, 2002). Journal of Accounting Research, Vol. 41, Issue 2, pp. 285-309, 2003; University of Alberta School of Business Research Paper No. 2013-685; Yale ICF Working Paper No. 02-17. Available at SSRN: https://ssrn.com/abstract=309753 or http://dx.doi.org/10.2139/ssrn.309753

Karim Jamal

University of Alberta - Department of Accounting, Operations & Information Systems ( email )

Edmonton, Alberta T6G 2R6
Canada
780-492-5829 (Phone)
780-492-3325 (Fax)

Michael Maier

University of Alberta - Alberta School of Business ( email )

2-30C Business Building
Edmonton, Alberta T6G 2R6
Canada
7802481275 (Phone)

HOME PAGE: http://https://business.ualberta.ca/about/contact-us/school-directory/michael-maier

Shyam Sunder (Contact Author)

Yale University - School of Management ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)

HOME PAGE: http://www.som.yale.edu/faculty/sunder/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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