Distributed Ledgers and Secure Multi-Party Computation for Financial Reporting and Auditing

Cao, Sean; Cong, Lin William; Yang, Baozhong

doi:10.2139/ssrn.3248002

Cited by 55 publications

(38 citation statements)

References 64 publications

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“…More broadly, the paper contributes to a rapidly growing literature discussing economic incentives in blockchain systems (Cong et al 2018, Saleh 2018, Biais et al 2019, Hinzen et al 2019, Rosu and Saleh 2019 and studying the implications of the technology for a variety of areas such as auditing (Cao et al 2018), corporate governance (Yermack 2017), crowdfunding Lyandres 2018, Gan et al 2020), finance (Biais et al 2018), innovation (Catalini and Gans 2017), Tsoukalas andFalk: Token-Weighted Crowdsourcing Management Science, 2020, vol. 66, no.…”

Section: Blockchain Systems and Tcrsmentioning

confidence: 99%

Token-Weighted Crowdsourcing

Tsoukalas

Falk

2020

Management Science

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Blockchain-based platforms often rely on token-weighted voting (“τ-weighting”) to efficiently crowdsource information from their users for a wide range of applications, including content curation and on-chain governance. We examine the effectiveness of such decentralized platforms for harnessing the wisdom and effort of the crowd. We find that τ-weighting generally discourages truthful voting and erodes the platform’s predictive power unless users are “strategic enough” to unravel the underlying aggregation mechanism. Platform accuracy decreases with the number of truthful users and the dispersion in their token holdings, and in many cases, platforms would be better off with a “flat” 1/n mechanism. When, prior to voting, strategic users can exert effort to endogenously improve their signals, users with more tokens generally exert more effort—a feature often touted in marketing materials as a core advantage of τ-weighting—however, this feature is not attributable to the mechanism itself, and more importantly, the ensuing equilibrium fails to achieve the first-best accuracy of a centralized platform. The optimality gap decreases as the distribution of tokens across users approaches a theoretical optimum, which we derive, but tends to increase with the dispersion in users’ token holdings. This paper was accepted by Gabriel Weintraub, revenue management and market analytics.

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Section: Blockchain Systems and Tcrsmentioning

confidence: 99%

Token-Weighted Crowdsourcing

Tsoukalas

Falk

2020

Management Science

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“…Of the 14 remaining articles, four articles were related to tax issues such as payroll, VAT, and trade barriers and regulatory tariffs. Further, ongoing research explores the application of blockchain and implications to financial accounting (Chandra Shekar, Kumaran, & Mishra, 2018;Yu, Lin, & Tang, 2018) and auditing (Cao, Cong, & Yang, 2018), the relevance of blockchain's open information concept (O'Leary 2018), literature reviews and comparisons (Breerbaum 2018; Tan 2018). Fenwick, MaCahery, and Vermeulen (2018) explore an emerging new business model which is a platform model and discusses the implications for regulation and corporate governance.…”

Section: Current Research In Accountingmentioning

confidence: 99%

Blockchain Research Agenda for Accounting

Vincent¹

2019

AFR

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Blockchain technology is causing a commotion in the business environment. Senior executives and board of directors are continuing to monitor and, in some cases, invest in blockchain with the hope of gaining a competitive advantage. However, the technology itself is still in the development stage. Even though there are many use cases presented for blockchain, the technology has to mature in order for firms and the business ecosystem to reap the benefits of the technology. Although traditionally the accounting profession has reaped the benefits of technological advancements, the profession has taken a more reactive approach to technology adoption. The purpose of this paper is to encourage the accounting profession to take a proactive approach and influence the development of blockchain by engaging in research related to blockchain technology. Therefore, in this paper, I provide a list of broad research questions related to blockchain based on major research areas in accounting. Given the broad range of questions presented here, accounting researchers can significantly influence the development and adoption of blockchain if researchers are willing to extend current research to a blockchain context.

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“…From a business perspective, blockchain technology is envisioned to disrupt the fields of accounting, finance, and auditing (e.g., Dai and Vasarhelyi, 2017;Yermack, 2017;Cong and He, 2019;Cao et al, 2019). According to a recent survey by PwC, four out of five executives around the world (84%) report having blockchain initiatives underway, with a quarter of these having blockchain implementations live or pilot projects running.…”

Section: Introductionmentioning

confidence: 99%

“…A prominent example are verification algorithms, such as zero-knowledge-proof protocols (e.g., Dai and Vasarhelyi, 2017;Wang and Kogan, 2018;Cao et al, 2019;EY, 2019). 5 These protocols verify business transactions based on the available data of all firms subscribed to a blockchain without sharing the underlying data itself and thus without revealing sensitive information in the process.…”

Section: Introductionmentioning

confidence: 99%

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Can You Trust the Blockchain? The (Limited) Power of Peer-to-Peer Networks for Information Provision

2019

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We investigate the potentials and limits of privacy-preserving blockchain technology for the generation of information. In our model, heterogeneous firms can rely on traditional institutions or adopt a blockchain to inform the capital market. The blockchain leverages its peer-to-peer structure and disseminates aggregate information while ensuring the privacy of individual data entries. Within this system, firm-specific information provision depends on two critical factors: (i) the blockchain's fit for analyzing a given firm's data, and (ii) its reach into the economy as provided by the proportion of firms adopting the blockchain in equilibrium. The technology can improve information provision in two ways. The adoption decision itself may serve as a credible signal of a firm's valuation, and the blockchain may generate more information than traditional institutions when its reach is sufficiently high. However, we characterize an equilibrium in which high-value and low-value firms are present both inside and outside the blockchain, which limits both channels' ability to generate information. We show that the information provision can even fall below the benchmark case in which blockchain technology is not available. JEL-Classification: D21, D40, M41, M48 B {0,0,1,1} B {1,0,1,1} B {1,0,1,1} B {0,0,1,1} B {1,0,1,0}γ {1,0,1,0}γ{1,0,1,0} γ {1,0,1,1}γ{0,0,1,1} γ BB {0,0,1,1} B {1,0,1,1} B {1,0,1,1} B {0,0,1,1} B {1,0,1,0}γ {1,0,1,0}γ{1,0,1,0} γ {1,0,1,1} γ {0,0,1,1}

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Distributed Ledgers and Secure Multi-Party Computation for Financial Reporting and Auditing

Cited by 55 publications

References 64 publications

Token-Weighted Crowdsourcing

Token-Weighted Crowdsourcing

Blockchain Research Agenda for Accounting

Can You Trust the Blockchain? The (Limited) Power of Peer-to-Peer Networks for Information Provision

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