Enforced Standards versus Evolution by General Acceptance: A Comparative Study of E-Commerce Privacy Disclosure and Practice in the U.S. and the U.K.
Journal of Accounting Research Vol. 43, Issue. 1, 2005
48 Pages Posted: 28 Jul 2003 Last revised: 11 Jun 2013
Date Written: December 1, 2003
Conventions as well as standards influence the practice of financial reporting. Reporting standards arise as legislated rules, enforced by the power of law. Conventions evolve over time through trial and practice, and are upheld by socioeconomic rewards and sanctions. Financial reporting in the second half of the twentieth century has been characterized by a preference for legislated standards, and a lack of faith in its evolution as a body of social conventions. Evidence on whether this faith in standards over conventions is justified remains to be marshaled. We present data on privacy practices in e-commerce under the European Union's (EU's) formal regulatory regime prevailing in the United Kingdom (U.K.), and compare it to the data from a previous study of United States (U.S.) practices that evolved in the absence of government laws or enforcement. The codification by the EU law, and the enforcement by the U.K. government, improves neither the disclosure nor the practice of e-commerce privacy relative to the U.S. Regulation in the U.K. also appears to stifle development of a market for web assurance services. Both U.S. and U.K. consumers continue to be vulnerable to a small number of e-commerce websites who spam their customers, ignoring the latter's expressed or implied preferences. These results are germane to the rules versus principles debate in accounting, and raise important questions about finding a balance between enforced standards and conventions in the domain of financial reporting.
Keywords: e-commerce, privacy, regulatory competition, financial reporting standards
JEL Classification: G38, K22, L51, L86, M41
Suggested Citation: Suggested Citation