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    Forthcoming paper: Valuing Personal Data to Foster Privacy:...
    blog entry posted March 23, 2016 by Roger S Debreceny, last edited March 23, 2016, tagged research 
    Forthcoming paper: Valuing Personal Data to Foster Privacy: A Thought Experiment and Opportunities for Research
    intro text:

    An important new commentary in JIS from Juergen Sidgman and Malcolm Crompton is entitled "Valuing Personal Data to Foster Privacy: A Thought Experiment and Opportunities for Research." Juergen is Assistant Professor at the University of Wisconsin at Oshkosh. Malcolm is Managing Director of Information Integrity Solutions in Australia and Australia's Privacy Commissioner from 1999 to 2004.   

    Malcolm Crompton

    text 2:

    Juergen  Sidgman


    What if accounting standards changed to require corporations to determine and present the value of personal data on financial statements?

    We argue that in this, the information age, markets would be significantly better informed, valuations of corporations would change radically and that board and management focus would be markedly different.

    In a time when data is increasingly becoming the foundation for business success, the race to collect, analyze, and use large amounts of personal data has left largely unattended the privacy considerations of individuals from whom this data is obtained. As a consequence, individuals are left alone to deal with increased risks of identity theft, potential embarrassment and stigma, and potential civil rights violations.

    On the surface, organizations seem to lack real incentives to protect personal data. Individuals continuously provide personal data at no cost to governments and to businesses through interactions with social media, Internet searches, and possession of smart devices and other internet connected equipment. In addition, anecdotal evidence shows that when breaches in corporate security lead to data breaches the reputational damages encountered by the affected corporations have no long-term economic consequences.

    In this commentary, we make the case that absent formal mechanisms enabling corporations to determine and present the value of personal data on financial statements, privacy considerations will continue to be neglected. We acknowledge the difficulty of the task ahead exposing difficult questions such as: how can we assess and reassess the evolving future economic benefits that collected data has the potential to create? In light of these difficulties and the paucity of research in this area, we present research opportunities that are relevant to different fields in accounting.

    We also elaborate on how we expect data valuation to impact privacy through greater understanding of data, improved market efficiency, and more thorough oversight over management’s handling of data assets. Finally, we express that through data valuation, the accounting community has a unique opportunity to limit, not only improper data protection mechanisms that weaken privacy, but also the growing market consensus exposing the diminishing usefulness of financial reports.

    We acknowledge that before any change such as this could be contemplated in practice, significant advances in accounting theory and practice will be essential. We also argue that the extent to which markets are currently ill-informed means that the time to start is now.