Academic journal article Auditing: A Journal of Practice & Theory

The Impact of Electronic Commerce Assurance on Financial Analysts' Earnings Forecasts and Stock Price Estimates

Academic journal article Auditing: A Journal of Practice & Theory

The Impact of Electronic Commerce Assurance on Financial Analysts' Earnings Forecasts and Stock Price Estimates

Article excerpt

The American Institute of Certified Public Accountants (AICPA) and Canadian Institute of Chartered Accountants (CICA) offer an electronic commerce (EC) assurance service called WebTrust[SM]. EC assurance provides comfort to potential consumers that an Internet company (1) discloses its business practices and executes EC transactions accordingly, (2) completes and bills customer orders as agreed, and (3) protects private customer and financial information from nonbusiness use. While the reaction of consumers to EC assurance is important, so is the response of financial market participants, such as analysts, to the expected impact on future firm performance and stock price estimates.

Eighty-seven financial analysts received a realistic case where we varied information on two risk factors associated with an Internet business. The first factor, termed "vendor-based risk," described the business as one where the company was either "familiar to consumers and had a positive reputation" (low risk) or "unfamiliar with an unknown reputation" (high risk). The second factor, labeled "outcome-based risk," portrayed the product/service offerings as either "books" (low risk) or "international travel/tour packages" (high risk). Research expectations were that providing EC assurance in the high-risk conditions would yield a greater positive impact on analysts' earnings forecasts and stock price estimates than the low-risk conditions. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.