Use Of Private Information Research Articles

The Influence of Controllability and Outcome Valence on Cost-Shifting

ABSTRACT In a setting that considers both operational and accounting decentralization, we propose that controllability and outcome valence effects (i.e., positive versus negative contractual outcomes for managers) interact to affect managers’ misreporting behavior. Experimental results show that the level of cost-shifting under negative outcome valence is relatively invariant to the amount of control over a project’s results, whereas the decision to engage in cost-shifting under positive outcome valence is contingent upon whether the manager had control or not. We contribute to the management accounting literature on contract framing and misreporting and extend research on how decentralization choices affect managers’ use of private information, with direct implications for practice. Our results suggest that limiting individual managers’ operational control primarily to constrain misreporting may only be beneficial when contracts stipulate positive outcomes for managers.

Fragmented Securities Regulation, Information-Processing Costs, and Insider Trading

Using a unique setting where stand-alone banks submit filings to bank regulators instead of the U.S. Securities and Exchange Commission (SEC), we examine the consequences of fragmented securities regulation for information-processing costs and opportunistic insider trading. We find the market reaction to insider-trading filings on FDICconnect is less timely than to those on SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system, suggesting FDICconnect generates higher information-processing costs. We also find only large investors trade more on insider-trading filings on FDICconnect than on insider-trading filings on SEC EDGAR, thus extracting benefits from the delayed market reaction to insider-trading filings on FDICconnect. Finally, we find increased insider selling in stand-alone banks prior to negative earnings news, suggesting insiders’ opportunistic use of private information. These findings collectively suggest regulatory fragmentation undermines market efficiency and distorts the level playing field. This paper was accepted by Suraj Srinivasan, accounting. Funding: This work was supported by the Eugene Lang Junior Faculty Fellowship. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4903 .

Privacy and Trust in the Internet of Vehicles

The Internet of Vehicles aims to fundamentally improve transportation by connecting vehicles, drivers, passengers, and service providers together. Several new services such as parking space identification, platooning and intersection control—to name just a few—are expected to improve traffic congestion, reduce pollution, and improve the efficiency, safety and logistics of transportation. Proposed end-user services, however, make extensive use of private information with little consideration for the impact on users and third parties (those individuals whose information is indirectly involved). This article provides the first comprehensive overview of privacy and trust issues in the Internet of Vehicles at the service level. Various concerns over privacy are formalised into four basic categories: personal information privacy, multi-party privacy, trust, and consent to share information. To help analyse services and to facilitate future research, the main relevant end-user services are taxonomised according to voluntary and involuntary information they require and produce. Finally, this work identifies several open research problems and highlights general approaches to address them. These especially relate to measuring the trade-off between privacy and service functionality, automated consent negotiation, trust towards the IoV and its individual services, and identifying and resolving multi-party privacy conflicts.

BIG DATA: НОВЫЕ ОРГАНИЗАЦИОННЫЕ ВОЗМОЖНОСТИ И СОЦИАЛЬНЫЕ РИСКИ

The article is devoted to an analytical review of the results of the application of "Big Data" ("Big Data") by various international companies and a review of expert assessments, in accordance with which the possibilities of using large data arrays as sociological information and, at the same time, sociocultural challenges, problems associated with information, which can be selected from biased samples, the risks associated with the use of private information and personal data for other purposes, in particular to create false news, distorted official statistics, to falsify polls and elections.

The effect of independent directors' financial expertise on the use of private information in setting bank CEO bonuses

PurposeThe purpose of this study is to examine whether independent directors' financial expertise affects the use of private information in setting bank chief executive officer (CEO) bonuses.Design/methodology/approachThe association between future firm performance and bank CEO bonuses is used to measure the incorporation of private information into bonuses. Both level and change specifications are employed to test the effect of independent directors' financial expertise on the use of private information in setting CEO bonuses.FindingsIt is found that future firm performance is more positively associated with bank CEO bonuses for banks with a higher proportion of financial experts among independent directors than for other banks. The findings suggest that independent directors with financial expertise can more effectively use private information in setting bank CEO bonuses.Originality/valueResearch on independent directors' role in the use of private information in setting compensation is valuable for understanding how corporate governance can enhance the efficiency of CEO compensation contracts. This study indicates that financial experts on the bank board play an important role in this regard.

Information Processing Skills of Short Sellers: Empirical Evidence from the COVID-19 Pandemic

We aim to answer if superior performance by short sellers’ is generated by processing public information rather than by exploiting private information. To achieve this, we analyze if short sellers with healthcare expertise outperform in short selling of non-healthcare stocks compared to those with no healthcare expertise. Since we expect that any short sellers’ private information about healthcare stocks is unlikely to be material for non-healthcare stocks, we conclude that any observed outperformance in non-healthcare stocks is more likely caused by processing public information. As an identification strategy, we interpret the outbreak of the COVID-19 pandemic as a treatment to short sellers with healthcare expertise. Our measures of healthcare expertise are based on pre-COVID-19 performance related to either holding or covering a short position in healthcare stocks. Using a unique German sample of daily short selling data, we find that treated short positions identified by general shorting (covering) outperformance are associated with lower 10-day CARs for non-healthcare stocks by an economically significant magnitude of 4.3 percent (7.2 percent). Robustness test rule out that our results are also driven by the use of private information or non information-based trading advantages such as better funding or borrowing ability of observed short sellers.

Octopamine and dopamine mediate waggle dance following and information use in honeybees.

Honeybees can be directed to profitable food sources by following waggle dances performed by other bees. Followers can often choose between using this social information or relying on memories about food sources they have visited in the past, so-called private information. While the circumstances that favour the use of either social or private information have received considerable attention, still little is known about the neurophysiological basis of information use. We hypothesized that octopamine and dopamine, two biogenic amines with important functions in reward signalling and learning, affect dance use in honeybees. We orally administered octopamine and dopamine when bees collected food at artificial feeders and tested if this affected interest in dance information about a new food source. We predicted that octopamine reduces interest in dances and strengthens private information use via an increase in the perceived value of the previously exploited resource. Since dopamine has been shown to lower reward perception, we expected it to act in the opposite direction. Octopamine-treated foragers indeed followed 32% fewer dances than control bees and increased the use of private information. Conversely, dopamine-treated bees followed dances 15% longer than control bees, but surprisingly did not use social information more. Overall, our results suggest that biogenic amine signalling affects interactions among dancers and dance followers and, thus, information flow about high-quality food sources.

BlendSPS: A BLockchain-ENabled Decentralized Smart Public Safety System

Due to the recent advancements in the Internet of Things (IoT) and Edge-Fog-Cloud Computing technologies, the Smart Public Safety (SPS) system has become a more realistic solution for seamless public safety services that are enabled by integrating machine learning (ML) into heterogeneous edge computing networks. While SPS facilitates convenient exchanges of surveillance data streams among device owners and third-party applications, the existing monolithic service-oriented architecture (SOA) is unable to provide scalable and extensible services in a large-scale heterogeneous network environment. Moreover, traditional security solutions rely on a centralized trusted third-party authority, which not only can be a performance bottleneck or the single point of failure, but it also incurs privacy concerns on improperly use of private information. Inspired by blockchain and microservices technologies, this paper proposed a BLockchain-ENabled Decentralized Smart Public Safety (BlendSPS) system. Leveraging the hybrid blockchain fabric, a microservices based security mechanism is implemented to enable decentralized security architecture, and it supports immutability, auditability, and traceability for secure data sharing and operations among participants of the SPS system. An extensive experimental study verified the feasibility of the proposed BlendSPS that possesses security and privacy proprieties with limited overhead on IoT based edge networks.

Introduction to Special Issue: Trust in Doubt: Consuming in a Post-Truth World

Introduction to Special Issue: Trust in Doubt: Consuming in a Post-Truth World

Measuring and Explaining the Probability of Informed Trading and its Relationship with the Cost of Capital with an Emphasis on Family Ownership

One of the most important topics studied in the field of market microstructures is to measure information asymmetry in the capital market. In recent years, the Probability of Informed Trading (PIN) has been introduced to measure information asymmetry. The use of private information in stock exchanges reduces stock liquidity, thereby increasing the cost of equity capital. The main purpose of this study is to investigate the relationship between the probability of informed trading and cost of capital as well as to examine the moderating role of family ownership in the relationship between the probability of informed trading and cost of capital in 113 companies listed on the Tehran Stock Exchange during 2012-2016. The independent variable of information asymmetry is measured by the probability of informed trading criterion and the dependent variable of cost of capital by the criterion of cost of equity and cost of debt, and the weighted average cost of capital, and the moderating variable is family ownership. The research method is correlational and the multivariate regression using combined data with fixed effect regression model approach is used. The research findings show that there is a positive and significant direct relationship between the probability of informed trading with the cost of equity and the weighted average cost of capital, as well as the variable of family ownership has a positive and significant direct effect on the relationship between the probability of informed trading and the weighted average cost of capital. When the probability of trading by private information holders increases, due to the increase in information asymmetry between informed and uninformed investors, uninformed investors demand higher returns to cover the investment risk, thereby increasing the company's cost of capital. This will increase the cost of financing through bonds.

Agency and Workplace Diversity: Evidence from a Two-Sided Audit

Firms increasingly delegate job screening to third parties. Outsourced recruiters introduce agency issues that can distort worker/employer matching. We present a simple model illustrating the tension between recruiters' use of private information about candidate preferences, and reputational incentives to impress employers. We then execute a novel two-sided audit experiment by directly engaging recruiting intermediaries. We show that agents' career concerns strongly shape selection decisions. Recruiters over-interview employer-favored candidates unlikely to reciprocate interest, while under-select candidates with stronger mutual interest. By changing outside offers, recruiters' career concerns affect candidates' negotiating leverage. We conclude by discussing extensions of our audit methodology.

Asymmetric Information in Microinsurance Markets: Experimental Evidence from Mexico

Microinsurers strive to simplify products and their pricing, a trend that runs counter to the customization and complex underwriting of insurance in richer markets. Although necessary to reduce costs and reach wide scale, this trend opens microinsurance markets to potential problems from information asymmetry. We use a large data set from a Mexican bank that offers a life insurance policy to its borrowers at a single rate. We exploit an exogenous determinant of insurance purchase to test for systematic use of private information by potential insurance clients. We find evidence of strategic behavior on the part of borrowers stemming primarily from insurers not using available borrower information but no evidence that individuals are acting systematically on information unobservable to the insurer. Our results provide robust evidence that individuals’ behavior in a life microinsurance market is not driven by private information, although theory predicts that this market should strongly suffer from information asymmetry. In addition, our findings have policy implications for the design of microinsurance products and for increasing financial access in developing countries.

Competencias y formación ética de los profesionales de la comunicación corporativa en contextos interculturales

Este trabajo propone una revisión de la necesidad de fomentar el estudio de la Ética y de la Deontología Profesional aplicada al ámbito de la Comunicación Estratégica e Institucional, sobre todo al mundo de las Relaciones Públicas y los Gabinetes de Comunicación. La revolución digital, que ha llegado para quedarse, plantea nuevos retos que el profesional de la comunicación estratégica debe afrontar: el uso de la información de los clientes, la privacidad y publicidad de las redes sociales, el nuevo derecho al olvido en la red, nuevos delitos a la intimidad y el honor a través de las redes sociales, la transparencia y acceso a la información tan de moda como herramientas para el control del poder político. A todo ello, hay que añadir el contexto de un nuevo escenario económico, social y cultural. Vivimos en una sociedad multicultural con conflictos étnicos, culturales y religiosos, permanentemente. En la actualidad, la interculturalidad se ha convertido en una realidad que no puede ser ignorada. Los futuros profesionales de la Comunicación necesitan una formación específica en valores universales que les capaciten para un mundo contemporáneo en el que cada vez tiene más sentido el término globalización. La ética adaptada a la interculturalidad es una competencia que debe desarrollarse de forma transversal en diferentes materias de las impartidas en los estudios, grados y especializaciones de las Ciencias de la Comunicación.

Privacy Challenges and Approaches to the Consent Dilemma

Privacy decisions and their underlying tradeoffs are genuine fields of study in economics. This master thesis builds on the well recorded findings that people give away more private information than they would like to reveal according to their pre-decisional statements. This so called ‘privacy paradox’ is one political justification for renewing outdated privacy laws towards a more privacy protecting approach. Since May 2018 the ‘General Data Protection Regulation’ (GDPR) is legally enforceable in Europe and intends to give Europeans citizens’ the legislative frame to protect their data. By changing the decision design from opting out of sharing data, to opting in allowing the use of private information, the regulation aims at giving Europeans thought-out control over their data. However, only few reads the privacy regulations of service providers and are able to process the information towards well-balanced decisions. This results in inflationary consent-giving of users and works against the actual political intention of enabling an informed consent giving. This master thesis intends in unfolding this ‘consent dilemma’ and finding solutions towards better informed decision-making.

Informed Trading in Business Groups

Abstract Business groups, which are collections of legally independent companies with a significant amount of common ownership, dominate private sector activity in developing countries. This paper studies information flows within these groups by examining the trading performance of institutional investors in firms that belong to the same group. Using a novel dataset with complete transaction records in Colombia, this paper estimates the difference in returns between trades of asset managers in group-affiliated companies and trades of non-affiliated managers in the same stocks during the same period. The data show that affiliated managers display superior timing ability and that their trades outperform those of non-affiliated managers by 0.85 percent per month. The evidence suggests that institutional investors with group affiliation access information that is only available to members of the group. In order to limit the use of private information, financial authorities might need to expand their disclosure rules to monitor the trades of group-affiliated investors.

DISCLOSURE DARI PERSPEKTIF PERUSAHAAN DAN PENGGUNA, MUNGKINKAH MENCAPAI EKUILIBRIUM ?

There are so much information available in security markets provided by many sources. These information then are used by many users for decision making. Disclosure is one of thoose containing more complete and more detail information a specific company.
 Inpresenting disclosure, company is facing trading off: how to present appropriate disclosure without eliminating users’ rights and preventing competitors in gainig private information.
 By collecting and analyzing disclosure from articles and researches, most from Accounting Review and Journal of Accounting. I found company will consider both costs and benefits in deciding which disclosure will be presented. Distrubing effect, the use of private information by potential competitors, is one of the company considerations. I concluded, since there always be the third party, equilibrilium disclosure will never be reached.

Industry familiarity and trading: Evidence from the personal portfolios of industry insiders

We study whether industry familiarity is an advantage in stock trading by exploring the trading patterns of industry insiders in their own personal portfolios. To do so, we identify accounts of industry insiders in a large data set provided by a retail discount broker. We find that insiders trade firms from their own industry more frequently. Furthermore, they earn abnormal returns exclusively when trading own-industry stocks, especially obscure stocks (small, low analyst coverage, high volatility). In a battery of tests, we find no evidence of the use of private information. The results are most consistent with the interpretation that industry familiarity is an advantage in stock trading.

Individual Uncertainty About Longevity.

This article presents an assessment of individual uncertainty about longevity. A survey performed on 3,331 French people enables us to record several survival probabilities per individual. On this basis, we compute subjective life expectancies (SLE) and subjective uncertainty regarding longevity (SUL), the standard deviation of each individual's subjective distribution of her or his own longevity. It is large and equal to more than 10 years for men and women. Its magnitude is comparable to the variability of longevity observed in life tables for individuals under 60, but it is smaller for those older than 60, which suggests use of private information by older respondents. Our econometric analysis confirms that individuals use private information-mainly their parents' survival and longevity-to adjust their level of uncertainty. Finally, we find that SUL has a sizable impact, in addition to SLE, on risky behaviors: more uncertainty on longevity significantly decreases the probability of unhealthy lifestyles. Given that individual uncertainty about longevity affects prevention behavior, retirement decisions, and demand for long-term care insurance, these results have important implications for public policy concerning health care and retirement.

The effects of liquidity trading on insider trade timing when an underlying option is present

PurposeThe purpose of this paper is to examine whether the underlying option impacts an insider’s propensity to purchase and sell before corporate announcements, the proportion of insiders’ trading after announcements relative to before announcements, and the insider’s profitability around corporate announcements.Design/methodology/approachThe authors test whether the timing information and option have impacted on the tendency of insider trade, the percentage of all shares traded by insiders in the post-announcement to pre-announcement periods and the average cumulative abnormal stock returns during the pre-announcement period.FindingsInsiders’ propensity to trade before announcements is higher for stocks without options listed than for stocks with traded options. This result is stronger for unscheduled announcements than for scheduled ones. The proportion of insiders’ trade volume after announcements relative to before announcements in stocks that have not options listed is higher than those in stocks with traded options. The positive relationship between the insiders’ signed volume and the informational content of corporate announcements is stronger in stocks without traded options than in stocks with options listed. Insider trades prior to unscheduled announcement are more profitable than those before scheduled ones.Research limitations/implicationsThe paper examines whether there is a difference between the effects of optioned stock and non-optioned stock. Roll et al. (2010) use the relative trading volume of options to stock ratio (O/S) to proxy for informed options trading activity. Future research could explore the impact of O/S. Moreover, the authors examine how insiders with private information use such information to trade in their own firms. Mehta et al. (2017) argue that insiders also use private information to facilitate trading (shadow trading) in linked firms, such as supply chain partners or competitors. Therefore, future research could consider the impact of shadow trading.Social implicationsSince the insider’s propensity to buy before announcements in stocks without options listed is larger than in stocks with traded options and the relationship is stronger for unscheduled announcements than for scheduled ones, the efforts of regulators should focus on monitoring insider trading in stocks without options listed prior to unscheduled announcements.Originality/valueFirst, Lei and Wang (2014) find that the increasing pattern of insider’s propensity to trade before unscheduled announcements is larger than that before scheduled announcements. The authors document the underlying option has impacted the insider’s propensity to purchase and sell, and the relationship is stronger for unscheduled announcements than for scheduled ones. Second, related studies show insider’s trading activity has shifted from periods before corporate announcements to periods after corporate announcements to decrease litigation risk. This paper find the underlying option has influenced the proportion of insiders’ trading after announcements relative to before announcements when the illegal insider trade-related penalties increase.

Acquiring organizational capital

Organizational capital is the accumulation and use of private information to enhance economic efficiency for a firm. Theory has argued that organizational capital is typically embodied in employees and the organizational structure, and is hard to transfer across organizations. In this paper, we study whether organizational capital is transferable across firms via mergers. The evidence shows that acquirers gain more from acquiring firms with higher organizational capital and acquirers are also willing to pay a higher premium for higher organizational capital targets. The evidence suggests that acquiring higher organizational capital targets creates synergies which are shared between acquirers and targets.