Announcing my new book: “Audit Analytics: Data Science for the Accounting Profession”

Audit Analytics: Data Science for the Accounting Profession

Uses R and RStudio software to plan, implement, and render an audit opinion that is legally and statistically defensible

Audit Analytics

ISSN 2197-5736 ISSN 2197-5744 (electronic)

ISBN 978-3-030-49090-4 ISBN 978-3-030-49091-1 (eBook)

https://doi.org/10.1007/978-3-030-49091-1

Information technology plays a pivotal role in financial control and audit: most financial data is now digitally recorded and dispersed among servers, clouds and networks over which the audited firm has no control. Additionally, a firm’s data—particularly in the case of finance, software, insurance and biotech firms— comprises most of the audited value of the firm. Financial audits are critical mechanisms for ensuring the integrity of information systems and the reporting of organizational finances. They help avoid the abuses that led to passage of legislation such as the Foreign Corrupt Practices Act (1977), and the Sarbanes-Oxley Act (2002).

Audit effectiveness has declined over the past two decades as auditor skillsets have failed to keep up with advances in information technology. Information and communication technology lie at the core of commerce today and are integrated in business processes around the world. This book is designed to meet the increasing need of audit professionals to understand information technology and the controls required to manage it. The material included focuses on the requirements for annual Securities and Exchange Commission audits (10-K) for listed corporations. These represent the benchmark auditing procedures for specialized audits, such as internal, governmental, and attestation audits.

Using R and RStudio, the book demonstrates how to render an audit opinion that is legally and statistically defensible; analyze, extract, and manipulate accounting data; build a risk assessment matrix to inform the conduct of a cost-effective audit program; and more.

Where to buy?

Springer

Amazon

Waterstones

Datasets

The auditanalytics package contains a collection of data sets used in the book. R Notebooks which contain the code in Audit Analytics are available below, and use these datasets as well as dependent packages. The auditanalytics package can be installed directly from github with:

devtools::install_github("westland/auditanalytics")

(Note: You may need to install devtools first if it is not already installed.)

Chapters & R Notebooks

(You can download the R code for each of the “Audit Analytics” chapters by clicking on the chapter link and running the downloaded .Rmd file in R Studio)

  • Preface and Frontmatter
  • Foreword by Erik Brynjolfsson
  1. Fundamentals of Auditing Financial Statements
  2. Foundations of Audit Analytics
  3. Analysis of Accounting Transactions
  4. Risk Assessment and Planning
  5. Analytical Review: Technical Analysis
  6. Analytical Review: Intelligence Scanning
  7. Design of Audit Programs
  8. Interim Compliance Tests
  9. Substantive Tests
  10. Sarbanes-Oxley Engagements
  11. Blockchains, Cybercrime and Forensics
  12. Special Engagements: Forecasts and Valuation
  13. Simulated Transactions for Auditing Service Organizations

Feedback

You can leave a comment, or ask a question in our issue tracker.

Chapter Synopses

Chapter 1: Fundamentals of Auditing Financial Reports

Audits are independent examinations of the records of an organization to ascertain how far the financial statements present a true picture of the firm, and that accounting systems are well-controlled, legal and accurate. Auditing has become such a ubiquitous phenomenon in the world that academics have chronicled the transition to “Audit Societies”. The early 20th century saw the standardization of auditors’ tests and reporting. Statistical sampling and computer tools to conduct statistical samples and opinions based on them are an integral part of modern auditing. This chapter surveys the state of the profession and what the 21st century auditor needs to know.

Chapter 2: Foundations of Audit Analytics

Broad application of statistical and data analytic tools are essential for the cost-effective completion of audits. Fortunately R has become the go to language for analytics, and offers many features that reduce the cost of data acquisition, preparation, exploration and summarization. It provides a scientific basis for audit decisions underlying the auditor’s opinion. Effective legal defense of audit methods is predicated on data analytics and statistical methods. This chapter summarizes the subset of R capabilities that are germane to an audit.

Chapter 3: Analysis of Accounting Transactions

Accounting transactions are the ‘raw data’ of accounting system, but the idiosyncratic vernacular of accounting, and spotty empirical study of distributions and characteristics of accounting transactions mean that statistical methods that are applied in other disciplines are likely to prove suboptimal, and even counterproductive in auditing. This chapter delineates the idiosyncrasies of accounting transactions and summaries, and describes tools to cost-effectively prepare and render decisions from client accounting data.

Chapter 4: Risk Assessment and Planning

Risk assessment, planning and budgeting of audits are essential precursors to the successful audit. The determination of risk of a particular subset of accounting operations related to the rendering of the audit opinion – i.e., on whether the accounts have material error when GAAP has been consistently applied. This chapter delineates construction of the risk assessment matrix – a collaborative “learning” worksheet to support a scientific foundation for audit scope, planning and budgeting prior to initiation of audit field tests.

Chapter 5: Analytical Review – Technical Analysis

Analytical procedures are evaluations of financial information made by a study of plausible relationships between both financial and non-financial data. They are used in all stages of the audit including planning, substantive testing and final review stage. This chapter surveys a range of R packages that ease technical analysis and data collection tasks in analytical review.

Chapter 6: Analytical Review – Intelligence Scanning

Before the mid-2000s, inexpensive access to financial and non-financial data was spotty, unreliable and scarce. Today, there are numerous social network, news and discussion boards that offer both raw and curated, streaming sources of useful business intelligence available that allow analytical procedures to study the plausible relationships between both financial and non-financial data. The auditor who does not scan for such client and industry intelligence both increases the cost of auditing, and can be considered negligent in not investigating all available information about the financial health of their client.

Chapter 7: Design of Audit Programs

Audit programs, from a scientific perspective, natural experiments – they are empirical studies in which the activities of firms, individuals or groups are exposed to the experimental and control conditions that are determined by nature or by other factors outside the control of the auditors. This chapter details the cost-effective planning for an audit, based on a deep understanding of natural experiments and the proper analytical tools needed to draw conclusions from them.

Chapter 8: Interim compliance tests

Compliance tests determine whether the firm’s transaction processing is in compliance with generally accepted accounting principles (GAAP). They have grown increasingly important and are the basis for much of the reporting in the SAS No. 115 letter to management, and support management’s response in the Sarbanes-Oxley letter. This chapter delineates the statistical tools used to insure cost effective compliance testing in the audit.

Chapter 9: Substantive Tests

Substantive testing directly supports the auditor’s opinion that economic events in the real world are or are not accurately summarized in the financial statements of a firm. This chapter delineates the statistical tools used to insure cost effective substantive testing in the audit.

Chapter 10: Sarbanes-Oxley Engagements

Academic research on reporting from Sarbanes-Oxley Act of 2002 (SOX) has to date focused on internal consistency, compliance and accrual accounting assessments. Some research has been performed on the related external risks such as fraud and security breaches. This chapter surveys what we know about compliance cost and information content of SOX filings, and provides machine learning tools to assess the information contained in SOX reports.

Chapter 11: Blockchains, Cybercrime and Forensics

Auditors are often asked to opine on technical security and encryption technologies, as well as providing admissible evidence in legal cases. This chapter reviews the most commonly encountered security and encryption technologies, with guides to how auditors should assess and manage them.

Chapter 12: Special Engagements: Forecasts and Valuation

Auditors have an intimate understanding of their client’s finances. Because of that, they are likely to be called upon to assess the value of a new or existing investment. This chapter reviews the factors that go into performing a successful assurance and valuation assessment for a client.

Chapter 13: Simulated Transactions for Auditing Service Organizations

Testing the shared, proprietary third-party platforms of service organizations and cloud computing presents auditors with a significant challenge. Auditors in these reviews can test automated controls by reading a ‘deck’ of known transactions and comparing these with the accounting reports generated by a client’s automated system. This chapter delineates procedures for constructing and using these methods.

 

J. Christopher Westland

I am currently Professor in the Department of Information & Decision Sciences at the University of Illinois – Chicago. I have a BA in Statistics and an MBA in Accounting from Indiana University and received my PhD in Computers and Information Systems from the University of Michigan. I have professional experience in the US as a certified public accountant and as a consultant in technology law in the US, Europe, Latin America and Asia.  I am the author of numerous academic papers and of seven books:  Global Electronic Commerce (MIT Press 2000); Global Innovation Management (Palgrave Macmillan 2nd ed 2017); Red Wired: China’s Internet Revolution (Marshall Cavendish, 2010); Structural Equation Modeling (Springer 2015);Financial Dynamics (Wiley 2003); Valuing Technology (Wiley 2002) and Statistical Auditing with R (forthcoming 2018).   I am the Editor-in-Chief of Electronic Commerce Research (Springer) and have served on editorial boards of several other information technology journals including Management Science, ISR, ECRA, IJEC, and others. I have served on the faculties at the University of Michigan, University of Southern California, Hong Kong University of Science and Technology, Tsinghua University, University of Science and Technology of China, Harbin Institute of Technology and other academic institutions. In 2012 I received High-Level Foreign Expert status in China under the 1000-Talents Plan and am currently Overseas Chair Professor at Beihang University. I have advised on patent, valuation and technology strategy for numerous technology firms.

Contact:

James Christopher “Chris” Westland, PhD, CPA
Professor , Department of Information & Decision Sciences
Room 2400, University Hall, University of Illinois – Chicago
601 S. Morgan Street, Chicago, IL 60607-7124
Mobile: (312) 860-0587 email: westland@uic.edu

Teaching

New Course on Software Coding for Cryptocurrencies

There are more than 1300 cryptocurrencies listed in the CoinMarketCap database, with new types arriving continually through Internet Coin Offerings.  Blockchain technology is the enabler of Bitcoin and of many other currencies, though not all.  This course will teach you to write software to code your own blockchain and fully understand how it works, its limitations and potential improvements to the technology originally described in Satoshi Nakamoto’s Bitcoin Manifesto (https://bitcoin.org/bitcoin.pdf ).  You will additionally learn cryptocurrency market analysis using transaction data available on services such as Yahoo Finance and Bitstamp; create visualizations of the daily Bitcoin exchange rate using data sourced from localBTC and the Quandl APIs; and analyze real-time cryptocurrency prices, trades, volumes, mining profitability, Ripple TXP settlements and more using CryptoCompare’s API.  “If you can code it, you certainly understand it”!

Innovation Strategy & Technology Entrepreneurship (IDS 518 / MGMT 518)

Entrepreneurship, innovation and new venture management have become the major drivers of wealth and economic growth in the 21st century.  Innovation – both the word, and its practice – have grown pervasive throughout industry, with the business press devoting cover stories and page after page of prose to the latest innovations destined to change our lives and enrich their inventors. CEOs, in speech after speech, invoke the mantra of innovation to justify their strategy.   New courses in marketing, strategy, finance and other functional areas in business schools have emerged that are devoted to explaining the role of innovation.   This course provides the student with a survey and case studies of successful innovations, their components, strategies and financial structure.   The course combines entrepreneurial, strategic, marketing, legal, societal and financial themes in support of innovative businesses and products.   Students who intend to start up their own businesses and those planning on extending the product lines of established firms will benefit from the material in this class. The course addresses the design of effective strategies given particular technological capabilities and competitive markets; and provides tools for the financial analysis that are essential for obtaining venture capital.

Audit Analytics (IDS 523)

Information technology plays a pivotal role in financial control and audit: most if not all financial data is now digitally recorded, and dispersed among servers, clouds and networks of computers over which the audited firm has no control.  Additionally, firm data – particularly in finance, software, insurance and biotech firms – comprises most of the audited value of the firm.   Financial audits are critical mechanisms ensuring the integrity of information systems and the reporting of organizational finances.  They help avoid the abuses that led to passage of legislation such as the Foreign Corrupt Practices Act, and the Sarbanes-Oxley Act.  Unfortunately, audit effectiveness has rapidly declined over the past two decades as auditor skillsets have failed to keep up with advances in information technology.  Information and communications technology lie at the core of commerce today, and are integrated in business processes around the world.  This course is designed to meet the increasing need of audit professionals to understand information technology and the controls required to manage it.  This course is designed to meet the increasing need of audit professionals to understand information technology in a world where paper as either an archive or display medium has ceased to exist.

Electronic Markets (IDS542 / MGMT 582)

The competitive landscape in e-business has changed dramatically over the past decade.  New technologies and marketing channels have pushed competition into realms that are both incredibly complex, and incredibly profitable – more than any time in the past.  Rates of return on successful Internet startups average over 50%, compared to those of traditional business that average in the range of 15%.  Improved profits come with elevated risk – business and technological – that confront investors and managers with new challenges.  Even when Internet marketing is successful, it may be difficult to figure out exactly why.   This course provides the student with a survey and case studies of successful Internet marketing models, their components, strategies and financial structure.  Students who intend to develop their own Internet businesses and those planning on extending the Internet marketing of established firms will benefit from the material in this class.  The course addresses the design of effective strategies given particular technological capabilities and competitive markets; and provides tools for the financial analysis that are essential for obtaining venture capital.

 

Vita

Professor, Department of Information & Decision Sciences

University of Illinois, 601 S. Morgan Street, Chicago, IL 60607-7124

USA +1.312.860.0587                   China +86.182.1088.7352

URL http://uic.edu/~westland      email westland@uic.edu

Education

  • Ph.D., Computers & Information Systems, University of Michigan, 1987
  • MBA, Accounting, Indiana University, 1973
  • BA, Mathematics (Physics & Chemistry minors), Indiana University, 1971
  • Languages: English, Mandarin Chinese

Certifications and Organizations

  1. Certified Public Accountant (Illinois License 065.035982)
  2. Illinois CPA Society
  3. Beta Gamma Sigma (Business Honorary Society)
  4. Mensa International; American Mensa

Career History

  1. Professor, IDS, University of Illinois – Chicago, 2007-present
  2. High-level Foreign Expert, P.R.China (under 1000-Talents Plan) Beihang University (Project 985 University, in Key Lab for Complex Decision making), 2012-2017
  3. Adjunct Professor, XiDian University, Xian, P.R.China, 2017-present
  4. Adjunct Professor, Shanghai University, Shanghai, P.R.China, 2019
  5. Adjunct Professor, University of Science and Technology of China, Hefei, P.R.China (C9 League University), 2013-2016
  6. Adjunct Professor, Key Center for e-Health, Harbin Institute of Technology, Harbin, P.R.China (C9 League university), 2011-present
  7. Adjunct Professor, Key Lab of Financial Intelligence and Financial Engineering (FIFE) at SWUFE (Project 985), Chengdu, P.R.China, 2007-Present
  8. Head, IDS, University of Illinois – Chicago, 2000-2007
  9. Professor, Information and Systems Management (Adjunct Professor in 2008-9), HK University of Science & Technology, 1995-2007 Visiting Professor (on Sabbatical Leave from HKUST) Tsinghua University, Beijing, 2002-2003
  10. Visiting Professor (on Sabbatical Leave from HKUST), Nanyang Technological University, Singapore, 2002
  11. Associate Professor with Tenure, Information and Operations Management, Marshall School, University of Southern California, 1994-1996
  12. Assistant Professor, IOM, Marshall School, University of Southern California, 1985-1988
  13. Assistant Professor, Accounting, Eastern Michigan University, 1986-1987
  14. PhD Student, Computers and Information Systems, University of Michigan, 1981-1987
  15. Database Admin & Security Manager, Rockwell International, Electronic Operations, 1977-1981
  16. IS Audit Manager, Republic Life, Dallas, 1976-1977
  17. Accounts Payable / Payroll Manager, Federated Department Stores, Dallas, 1975-1976
  18. Auditor, IS Consultant, Touche Ross, Chicago, 1973-1975

Editorial

  1. Electronic Commerce Research (Editor-in-Chief, 2013-present: Impact factor: 2.507 (2019); 5-year IF: 2.643 (2019); Acceptance: 14%; articles/yr: 40; downloads: ~100K/yr)
  2. Electronic Commerce Research and Applications (Editor, 2006-2014)
  3. Information and Management (2011) , Associate Editor
  4. Social Science Research Network: Information Systems & eBusiness (2004- 2014), Board
  5. Management Science (1995-2002), Associate Editor
  6. Information Systems Research (1996-2000) , Associate Editor
  7. Electronic Markets (2001-Present) , Associate Editor
  8. Telecommunications Systems (2003-Present) , Associate Editor
  9. International Journal of Online Marketing (2010 – present) , Associate Editor
  10. International Journal of Electronic Commerce (1996-Present) , Associate Editor
  11. Electronic Commerce Research Journal (2001-Present) , Associate Editor
  12. Journal of End User Computing (1995-present) , Associate Editor
  13. MIS Review (2009-Present) , Associate Editor
  14. International Journal of Internet & Enterprise Management (2003-Present) , Associate Editor
  15. International Journal of E-Entrepreneurship and Innovation (2011) , Associate Editor
  16. E-Marketing in Developed and Developing Countries: Emerging Practices
  17. Editor of Special Issue: ICEC 2011, ECRA
  18. Editor of Special Issue: e-Markets in China, ECRA
  19. Editor of Special Issue: Social Networks and Web 2.0, ECRA
  20. Research Grants Council, Hong Kong
  21. International Review of Management (2004-present) , Associate Editor

    Books and Software

    1. Audit Analytics: Data Science for the Accounting Profession (in R. Gentleman, et al. “Use R!” series), Springer 2020
    2. Structural Equation Modeling: from paths to networks, Springer, 2nd edition (2019)
    3. Global Innovation Management: A Strategic Approach (2nd ed.) London: Palgrave / Macmillan 2018.
    4. Structural Equation Modeling: from paths to networks, Springer, 1st ed. (2016)
    5. Financial Auditing with Information Technology, Creder Press, ISBN-13: 978-1490448732; ISBN-10:149044873X, 2015
    6. Red Wired: China’s Internet Revolution, London: Cyan (Marshall Cavendish), 2010 (with S. So); Kindle edition, 2012
    7. Global Innovation Management: A Strategic Approach London: Palgrave / Macmillan 2008; Companion Websites at http://www.palgrave.com/business/westland/, Simplified Chinese translation by Chinese University of Science & Technology Press, Hefei, Anhui, China.
    8. Financial Dynamics: A System for Valuing Technology Companies, New York: John Wiley & Sons, June 2003 with Financial Dynamics software (versions 1 and 2)
    9. Valuing Technology: The New Science of Wealth in the Knowledge Economy, New York: John Wiley & Sons, 2002
    10. Global Electronic Commerce: Theory and Case Studies (with Ted Clark) MIT Press, 2000, additional printings 2001-2; Chinese (simplified) from Fudan U. Press Shanghai August 2000; Chinese (full stroke) from Best Wise: Taipai, August 2000; republished by Universities Press (India) Limited for distribution in India, Bangladesh, Bhutan, Nepal, Sri Lanka, the Maldives, and Pakistan, paperback English, 2008
    11. Information Technology Risk: A Guide for Accountants and Auditors, Hong Kong Society of Accountants monograph (HKICPA), 1996

    Refereed Publications

    1. Understanding Characteristics of Popular Streamers on Live Streaming Platforms: Evidence from Twitch.tv, Journal of the AIS, forthcoming 2020 (with K. Zhao, Y. Hu)
    2. Assessing Privacy and Security of Information Systems from Audit Data, Information Systems Frontiers (forthcoming 2020)
    3. When all Products are Digital: Complexity and Intangible Value in the Ecosystem of Digitizing Firms, Information Systems Research (forthcoming 2020) (w/ Pouya Rahmati, Ali Tafti, and Cesar Hidalgo)
    4. Predicting Credit Card Fraud with Sarbanes-Oxley Assessments and Fama-French Risk Factors, Intelligent Systems in Accounting, Finance and Management, DOI: 10.1002/isaf.1472 (forthcoming 2020)
    5. The information content of Sarbanes-Oxley in predicting security breaches. Computers & Security. 2020 Mar 1;90:101687
    6. Demand cycles and market segmentation in bicycle sharing. Information Processing & Management 56.4 (2019): 1592-1604 (with Jian Mou, and Dafei Yin)
    7. A two-sided matching model in the context of B2B export cross-border e-commerce. Electronic Commerce Research 19.4 (2019): 841-861 (with Miao, Yumeng, et al.)
    8. Introduction to the special issue: electronic commerce in China’s Belt and Road Initiative. Electronic Commerce Research 19.4 (2019): 747-748.
    9. Microlending on mobile social credit platforms: an exploratory study using Philippine loan contracts. Electronic Commerce Research (2019): 1-24 (with Mou, Jian, et al.)
    10. Introduction to the special issue on Big Data in finance and business. Electronic Commerce Research 18.2 (2018): 201-201.
    11. Convolutional Neural Network Deep-Learning Models for Prediction of Shared Bicycle Demand. International Conference on Applications and Techniques in Cyber Security and Intelligence. Springer, Cham, 2018 (with Jian Mou, and Dafei Yin)
    12. Introduction to the special issue: electronic commerce in social networks. Electronic Commerce Research. 2020 Mar 7:1-.
    13. Methods to assess the value of new technologies: The case of consumer sentiment towards digital wallet technology.” Data-Enabled Discovery and Applications 1.1 (2017): 2.
    14. An empirical investigation of analytical procedures using mixture distributions, J Christopher Westland – Intelligent Systems in Accounting and Auditing, 2017
    15. Co-Diffusion of Mobile Operator’s OTT and SMS Messaging Services in Emerging Economies, Y Yu, JX Hao, M Zuo, S Shan, C Westland – 2016 – aisel.aisnet.org
    16. Electronic Commerce Research in seven maps (Hsu, Chien-Lung, J. Christopher Westland, and Chun-Hao Chiang) Electronic Commerce Research 15.2 (2015): 147-158.
    17. Substitutes, complements and network effects in instant messaging services (JC Westland, JX Hao, X Xiao, S Shan ) Networks and Spatial Economics 16.2 (2016): 525-543.
    18. The golden age of consumer research.” Electronic Commerce Research 15.3 (2015): 297-299.
    19. Convolutional Neural Network Deep-Learning Models for Prediction of Shared Bicycle Demand (Westland, J. Christopher, Jian Mou, and Dafei Yin. “) book chapter, International Conference on Applications and Techniques in Cyber Security and Intelligence. Springer, Cham, 2018.
    20. Transaction risk management in China-US trade e-markets. (Westland, J. Christopher, and Ye Di) Proceedings of the 14th Annual International Conference on Electronic Commerce. ACM, 2012.
    21. Introduction to the special issue on Big Data in finance and business.” Electronic Commerce Research 18.2 (2018): 201-201.
    22. Economics of eBay’s buyer protection plan.” Financial Innovation 1.1 (2015): 7.
    23. The moderating role of income on consumers’ preferences and usage for online and offline payment methods (See-To, Eric WK, Savvas Papagiannidis, and J. Christopher Westland.) Electronic Commerce Research 14.2 (2014): 189-213.
    24. The adoption of social networking technologies in cinema releases.” Information Technology and Management 13.3 (2012): 167-181.
    25. Chinese E-Commerce Introduction (Westland, J. Christopher, Guoqing Chen, and Sulin Ba) (2013): 297-298.
    26. The information content of financial survey response data.” Financial Innovation 1.1 (2015): 10
    27. Employing transaction aggregation strategy to detect credit card fraud, S Jha, M Guillen, JC Westland – Expert systems with applications, 2012 – Elsevier
    28. A descriptive study of credit card fraud pattern (Jha, Sanjeev, and J. Christopher Westland.),Global Business Review 14.3 (2013): 373-384.
    29. Employing Transaction Aggregation Strategy to Detect Credit Card Fraud Expert Systems With Applications, Expert Systems With Applications, ESWA-D-12-00805 forthcoming 2012 (w. Montserrat Guillen and Sanjeev Jha)
    30. The Adoption of Social Networking Technologies in Cinema Releases; Information Technology and Management, http://www.springerlink.com/content/g23qg84ru0p45122/ 2012
    31. Affective Technologies in Survey Research; Information Technology and Management, https://springerlink3.metapress.com/content/x52716m719127430/resource-secured/?target=fulltext.pdf&sid=jahv2wfekzeq2nn4hpdzifyx&sh=www.springerlink.com 2012
    32. Electrodermal Response in Gaming, Journal of Computer Networks and Communications, vol. 2011, Article ID 610645, 2011. doi:10.1155/2011/610645.
    33. Lower Bounds on Sample Size in Structural Equation Modeling, Electronic Commerce Research and Applications, Dec 2010, PII:S1567-4223(10)00054-2, DOI: 10.1016/j.elerap.2010.07.003 (with software downloadable from Elsevier) in Top Ten Most Downloaded papers on ECRA
    34. Divorce Insurance: Mitigating the Adjudication Period Financial Crisis, Journal of Divorce & Remarriage, 52:1–38, 2011, ISSN: 1050-2556 print/1540-4811 online, DOI: 10.1080/10502556.2011.585084 (lead article)Data Mining for Credit Card Fraud, Decision Support Systems (with Sid Battacharyya and Sanjeev Jha) 2010 DOI: 10.1016/j.dss.2010.08.008
    35. Critical mass and willingness to pay for social networks, Electronic Commerce Research and Applications, Dec 2009 (lead article, with comment by Andrew Odlyzko)
    36. Incentives for Mobile-Online Gaming with Competing Electronic Cash Services, International Journal of Electronic Business (with E.W.K. See-To), 2009
    37. Short-run Price-Performance Dynamics in Microcomputer Technologies, Research Policy (with E.W.K. See-To) volume 36, Issue 5, Pages 591-806, June 2007
    38. The IS Core-XII: Positive Research in Information Systems, in Communications of the AIS, 2004 in volume 14
    39. Why is it so difficult to put a value on technology?, The International Journal of Entrepreneurship Education (IJEE), v. 3 (2004)
    40. The Cost Behavior of Software Defects, Decision Support Systems, Volume 37, Issue 2 , May 2004, Pages 229-238
    41. What Electronic Commerce Can Learn from Securities Market Automation, in Tan, F. (ed.) Advanced Topics in Global Information Management, Idea Group, 2003 pp. 97-119
    42. Preference ordering Cash, Near Cash and Electronic Cash, Journal of Organizational Computing and Electronic Commerce, 12(3), pp. 223-242, 2002
    43. Transaction risk in electronic commerce, Decision Support Systems, (33)1 (2002) pp. 87
    44. Electronic commerce and delays in market matching, Journal of Organizational Computing and Electronic Commerce, Volume 12 Number 2, Jun 2002 , 121-132
    45. Systems Complexity and the Cost of Errors in Software Development, Journal of Systems and Software, Volume 62, Issue 1, 1 May 2002, p. 1-10 (lead article)
    46. Electronic Delivery of Convenience: A Service Innovation at the 7-Eleven Retail Chain in Hong Kong, Journal of Information Technology Cases and Applications (JITCA), 2002 (with Lange, Karl)
    47. Electronic commerce and delays in market matching, Journal of Organizational Computing and Electronic Commerce, 2001
    48. Ten Lessons that Electronic Commerce Can Learn from the Automation of Securities Exchanges, Journal of Global Information Management, Jan-Mar 2000
    49. Privatization of Electrical Networks in Chile: A Case Study to Serve as a Model for Information Networks of Today Journal of Information Technology Cases and Applications (JITCA), v. 2 (3) 2000
    50. Modeling the Incidence of Post-Release Errors in Software, Information Systems Research, September 2000
    51. Customer and Merchant Acceptance of Electronic Cash: Evidence from Mondex in Hong Kong, International Journal of Electronic Commerce, v 2(4) Summer, 1998, 5-26
    52. Impacts of Electronic Marketplaces on Product Prices: An Empirical Study of the AUCNET Case, International Journal of Electronic Commerce, Volume 4 ,Issue 2 December 1999 Pages: 45 – 60 (with H.G. Lee and S. Hong)
    53. Some Conditions for Cost Efficiency in Hypermedia, Information Processing and Management, v.34(2/3), 1998, 309-323
    54. A Comparison of Shopping Experiences in Three Competing Digital Retailing Interfaces (w/ Grace Au), International Journal of Electronic Commerce, 1998
    55. The Moscow Stock Exchange and The Shanghai Stock Exchange: Electronic Markets for Voucher Driven and State Managed Privatization of State Owned Enterprises, in Business Information Technology Management: Closing the International Divide, P. Banerjee, R. Hackney, G. Dhillon and R. Jain (eds.), Haranand , 1998
    56. Electronic Cash in Hong Kong Electronic Markets v.7(2), p. 3 (with M. Kwok, J. Shu, T. Kwok and H, Ho)
    57. Automation of China’s Securities Markets (1997) Electronic Markets v.7(2), p. 3 (with 23. S.M. So)
    58. A Rational Choice Model of Computer Network Security, Journal of Electronic Commerce, v.1(2), Winter 1996-97
    59. The COCOMO 2.0 Software Cost Estimation Model, American Programmer, Cutter Information Corp., July 1996, and reprinted in Software Management, Fifth Edition, IEEE Computer Society Press, Washington D.C., 1996(with B.Boehm, B. Clark, E. Horowitz, R. Madachy and R. Selby), 1996
    60. Cost Models for Future Software Life Cycle Processes: COCOMO 2.0, Annals of Software Engineering, Vol. 1, Software Process and Product Measurement, J.D. Arthur and S.M. Henry (eds.), J.C. Baltzer AG, Science Publishers, Amsterdam, The Netherlands, 1995, pp. 57-94 (with B. Boehm, B. Clark, E. Horowitz, R. Madachy and R. Selby)
    61. Bayesian Alternatives to Neural Computing, IEEE Transactions on Systems, Man and Cybernetics, November 1994
    62. Reporting Strategies for ‘Events’ Accounting, Journal of Information Systems, Fall 1994
    63. Business Process Reengineering at Pacific Bell, Planning Review, May/June, 28-33(with) Housel, Thomas and Christopher Morris)
    64. Congestion and Network Externalities in the Short Run Pricing of Information Systems Services, Management Science, v. 38(6) July 1992, 992-1099
    65. CASE as Negotiation: Goals for Systems Design and Management of Group Learning in an Automated Systems Design Process, Sistemica, v.1(2), 131-143 (English version) 145159 (Spanish version)
    66. Cinema Theory, Video Games, and Multimedia Production, in Multimedia Computing: Preparing for the 21Century, Reisman (ed.), Middletown, PA: Idea Group Publishing, December 1995
    67. The Marginal Analysis of Investments in Information Technology, in Strategic and Economic Impacts of Information Technology Investment: Perspectives on Organizational Growth and Competitive Advantage, Mahmood, Banker and Kauffman (eds.), Middletown, PA: Idea Group Publishing, September, 55-81
    68. Economics and Global Information Technology Education, in Global Information Technology Education: Issues and Trends, Lock (ed.), Middletown, PA: Idea Group Publishing, 419-450
    69. CASE in Business and Administrative Information Systems, in Computer-Aided Software Engineering: Issues and Trends for he 1990s and Beyond, Bergin (ed.),Middletown, PA: Idea Group Publishing, 401-427
    70. Allocated Cost Schedules to Control Equipment Usage `Bottlenecks’, in Tools and Techniques of Cost Estimating and Analysis, W.R.Greer (ed.), New York: Springer-Verlag, 65-81
    71. Economic Incentives for Database Normalization, Information Processing and Management, v. 28 (5), 647-662
    72. Problem Vectorizability and the Market for Vector Supercomputing, Information Processing and Management, v. 27(5), 499-515
    73. Collaboration and Productivity in Information Systems Research, The Information Society v.7(1), 33-50
    74. Self-Organizing Executive Information Networks, Decision Support Systems, v.8, 41-53
    75. Scaling Up Output Volumes Predicted by Information Systems Prototypes, Association for Computing Machinery/TODS, v. 15(3), 341-358
    76. Assessing the Economic Benefits of Information Systems Auditing, Information Systems Research, v.1(3), September 1990, 309-24
    77. Economic Constraints in Hypertext, Journal of the American Society for Information Science, v. 42(3),178-184
    78. Topic Specific Market Concentration in the Information Services Industry: Evidence from the DIALOG Group of Databases, The Information Society, v. 6, 127-138
    79. Parallel Renaissance in Neural Networks: A Bayesian Approach to Neural Learning, Behavioral and Brain Science, v.12, 1989,160 (with Manfred Kochen)
    80. A Net Benefits Approach to Measuring Retrieval Performance, Information Processing and Management, v.25(5), 579-581

Computer Languages

R, Keras, Tensorflow, Python, Fortran, Java, SAS, SPSS, Mathematica, HTML, C#, C++, C, VB

Executive Education

  1. Vietnam EMBA, Hanoi and HCMC, Vietnam
  2. American University of North Africa, Tunis, Tunisia
  3. New York Institute of Finance, Valuation of Technology Ventures
  4. Kellogg-HKUST, Information Technology Strategy
  5. CIEBS, Information Technology Strategy
  6. Tsinghua, Information Technology Strategy
  7. USC, Information Technology Strategy

Teaching Case Studies

  1. Electronic Delivery of Convenience: A Service Innovation at the 7-Eleven Retail Chain in Hong Kong, 2002 (with Lange, Karl)
  2. Privatization of Electrical Networks in Chile: A Case Study to Serve as a Model for Information Networks of Today, 2000
  3. The Moscow Stock Exchange, 1997
  4. The Shanghai Stock Exchange, 1997 China’s Brokerage Rooms, 1997
  5. Electronic Securities Trading at the Bolsa de Comercio de Santiago, 1994
  6. Chilgener: Pricing of Network Services, 1994
  7. Philippines Telephone & Telegraph, 1994
  8. Information Systems Security at McDonnell Douglas Aerospace Information Systems, February 1993 and videotape by same title, 1993

Consulting (selected projects)

  1. Research Corporation of University of Hawaii (Innovation strategy)
  2. Audit & Assurance Services Committee
  3. Board of Directors, MIT e-Business Center, Boston, MA, USA
  4. Business Week Board of Advisors (Asia, Finance)
  5. Forensis (expert testimony in numerous ongoing cases)
  6. Rosenfeld Hafron Shapiro & Farmer LLP (Forensic Accounting)
  7. The Emerging Markets Risk Advisory (technology risk modeling)
  8. External Examiner for MBA programs at Hong Kong University
  9. Borland (IS Governance)
  10. Singapore Manufacturers Association (technology valuation)
  11. Microsoft (Redmond WA; Dublin, Ireland; valuing technology / software cost modeling)
  12. Aerospace Corporation (software cost modeling)
  13. V-Tech (software business modeling and industrial design)
  14. Intel (Rosettanet)
  15. Motorola (mobile Internet markets)
  16. IBM (electronic commerce)
  17. Pacific Bell (software cost modeling and workflow)

Selected Trade Publications

  1. Valuing Tech, Benchmark, October 2003, Vol. 1, No. 10, p. 34-40
  2. The Internet’s Challenge to Accounting, The Hong Kong Management Accountants, Fall
  3. Cyberport is the wrong way to promote E-commerce, The Hong Kong Economic Journal, Mar 29, 1999
  4. Cyber Wet-Markets: an idea whose time has come?, The Hong Kong Economic Journal, May 3, 1999 Knowledge
  5. Workers and Hong Kong’s E-commerce Infrastructure, The Hong Kong Management Accountants, Spring 1999
  6. E-Commerce Primer, Computer Careers Magazine, 1997
  7. E-Commerce Success Secrets, Computer Careers Magazine, 1997
  8. The Office Suites, Computer Careers Magazine, 1997
  9. Internet Investing, Computer Careers Magazine, 1997
  10. Taguchi Methods in Software Engineering, USC Computer Science Technical Report
  11. Competing in the World’s Computer Market, Scientific American, November 1990
  12. Short Circuiting Computers, New York Times, October 30 1990
  13. Tinbergen Lectures on Organization Theory, Interfaces, v. 19(6), November-December

Ph.D. Students

  1. Poornima Krishnan (graduated 2010)
  2. Sanjeev Jha (graduated 2009), University of New Hampshire
  3. Kirill Yurov (graduated 2009), Nova University
  4. Carsten Paasch (graduated 2008) Senior VP – Information Security, Standard Chartered Bank
  5. Wendy Hui, (graduated 2005), Nottingham University
  6. Eric See-to (graduated 2005).Research Fellow. University of Lancaster Business School, U.K.
  7. Hilton Chan, (graduated 2000), Hong Kong Police, Head of Special Investigations
  8. Eric Law, (graduated 1999) CEO, Boncle, Inc. (secure internet platforms) Santa Clara, CA

Recent Activities

  1. Discussant: Panel on Blockchain Research Opportunities for IS researchers, ICIS pre-workshop expert panel, , San Francisco, Dec 12
  2. Presentation: Neural Network Prediction of Demand Cycles for Bicycle Sharing and Load Balancing, Pre – ICIS workshop (SIG – AIAA), San Francisco, Dec 14
  3. Session Chair: WeB2018; Cross-border electronic commerce, San Francisco, Dec 12
  4. Keynote speech, Wuhan International Conference on E-business will be held at Wuhan on May 26 2018
  5. Keynote speech, International Conference of Applications and Techniques in Cyber Intelligence July 12, 2018
  6. China Summer Workshop on Information Management 2018, Qingdao University, Qingdao, June 23 – 24, 2018
  7. Research Presentation, Hebei University of Technology, June 20-22
  8. Research Presentation / PhD Seminar, Tsinghua University, June 26-30
  9. Research Presentation, Xidian University, May 21, 2018
  10. Research Presentation, Jilin University of Finance and Economics, June 19 2018
  11. Research Presentation, Shanghai University, July 4 2018
  12. Research Presentation, Harbin Institute of Technology, May 16 2018
  13. Research Presentation,Zhejiang Institute of Science and Technology, June 29-july 3
  14. Research Presentation, Convolutional Neural Network Deep‐Learning Models for Prediction of Shared Bicycle Demand Chris Westland (University of Illinois-Chicago), J. Mou, D. Yin) Discussant Yong Xia (Virginia Tech), WeB2018
  15. Keynote Speech, ICIM 2017, Taipei, Taiwan, May 12, 2017
  16. High-Level Foreign Expert Award (3 years), 1000-Talents Plan, SAFEA, Beijing, PRC; sponsoring university: Beijing University of Aeronautics and Astronautics
  17. Professor Says Divorce Insurance Possible, by Timothy Kirn, Insurance Journal, December 11, 2009, http://www.insurancejournal.com/news/national/2009/12/11/105912.htm
  18. Turning instant messaging into a gold mine (Editor’s Choice) , Global Times [13:04 June 15 2009], with S. So (http://business.globaltimes.cn/industries/2009-06/437042.html)
  19. Sina’s Sino-news formula made it number one, Global Times, 20 Monday May 25, 2009, with S. So (http://business.globaltimes.cn/industries/)
  20. Google’s China odyssey (Editor’s Choice), The Global Times [14:01 June 08 2009] with S. So (http://business.globaltimes.cn/editor-picks/2009-06/435364.html)
  21. Cold Wars and Search Wars, MIS-Asia (China’s Internet 36 March 2009 MISASIA) http://mis-asia.com/opinion__and__blogs/bloggers/healthcare-and-the-coming-informatics-revolution-part-1/comment
  22. Shanda: The art of getting paid, Global Times (Editor’s Choice), [18:39 June 22 2009] http://business.globaltimes.cn/editor-picks/2009-06/438710.html

Research

Machine Learning and Artificial Intelligence

Exponential growth of computing power has made possible the efficient application of perceptron and graph theoretic solution concepts to networks in e-Commerce, merger and acquisition activity, social networks and numerous other fields with substantial and growing economic importance.    My work has translated traditional economic ‘comparative statics’ models,  central to the study of information technology markets, into machine learning models that can highlight emergent behavior and short period phenomena unavailable in comparative statics.   I am particularly impressed with the deep-learning tools from the Google Brain group, who are building an expanding array of products to provide viable “big data” alternatives to traditional statistics.  Their tools are rooted in tensor representations of the real world (just as statistics has evolved mainly from vector and matrix models) and offer many new metrics for the analysis of markets that have equal or greater impact on their performance than simple price and value metrics.   Both offer opportunities for deeper understanding of technology management and markets using computationally intensive methods.

Business Analytics

I am interested in making sense out of the extremely large datasets that are increasingly available online and from industry.  I take advantage of new, computationally intensive analysis tools, statistical packages, machine learning and visualization tools to create human-digestable analyses and graphics.  I am particularly interested in forensic statistical methods adapted from fields such as actuarial science, information science and physics.  I have been adapting social networks analysis and graphics, using R, Tensorflow and Mathematica  for the creation of inference models can be designed with a variety of probability, distance or weight metrics, and can be constructed through junction tree propagation algorithms with discrete and continuous evidence.

Electronic Commerce

My work in electronic commerce grew out of studies of stock-market automation (a very dynamic area in the early 1990s, as the number of stock exchanges nearly doubled, partly in response to the crash of 1987, with most new exchanges being electronic).  Electronic commerce platforms have since proliferated in such diverse areas as service and asset sharing, exchange of difficult to value assets, code bases and ideas, and governance.

I am Editor-in-Chief of one of the oldest electronic commerce journals: Electronic Commerce Research.   During my tenure I have moved the journal from its more traditional telecommunications and management information systems focus to a more comprehensive journal embracing cutting edge research in business, economics, computer science, machine learning and AI, politics and social science.    The journal has steadily improved its bibliometric rank, and is now indexed in the most important repositories.

Information Technology Economics and Valuation

I worked for several years as a CPA in Chicago and Dallas, where I accrued experience in finance and accounting.  I have continued some of these work in my academic studies into the economic consequences of technlogy management and investment.  Much of my early work at the University of Southern California’s Center for Software Engineering was on software metrics. There I developed the statistics for the Cocomo 2.0 software costing model. My work on software metrics led me to address the more general problem of IT valuation. Much of the value of information technology is contained in intangible assets – software, methods, ongoing services, and options. These are assets that traditional accounting and finance models find difficult to value because they lack an ‘objective’ basis for valuation.

Technology risk became a central topic in finance, project management and electronic commerce  following the 2008 crash. I have been expanding valuation modeling work in which I engaged from 2000 to 2004 (resulting in the publication of two books) to incorporate models from insurance and credit and market risk modeling.

 

Electronic Commerce Research

I currently serve as Editor-in-Chief of the Springer research journal Electronic Commerce Research, which is increasingly an outlet for cutting edge business analytics research in electronic commerce. Under my editorship, our 2019 Impact Factor has risen to 2.507 (2.643 5-year).   Other current statistics:

  • Over 600 submissions per year
  • 55 articles published in 2020
  • Ave. 32 days from submission to first decision
  • 107,511 article downloads in 2020

Electronic Commerce Research is an open choice, ISI indexed journal; it is the oldest academic journal dedicated solely to electronic commerce (since 2001). It is abstracted / indexed in SSCI, JCR, SCOPUS, INSPEC, Zentralblatt Math, Google Scholar, EBSCO, CSA, ProQuest, Academic OneFile, ACM, and other major venues. Further information about the journals aims and content can be found at http://link.springer.com/journal/10660.
ECR Cover