Auditing in the self reporting economy
By: Romana L. Autrey, Richard Sansing
Contributors: Sansing, Richard; Harvard Business School. Division of Research
Series: Working paper / Division of Research, Harvard Business School -- 07-100; Working paper (Harvard Business School. Division of Research) -- 07-100
Publisher: Division of Research, Harvard Business School
Published: 2007
Place of publication: Boston
Language: eng
Number of pages: 30
Description: This paper examines the licensing of intellectual property in exchange for royalties that depend on the self-report of the licensee. The self-reporting aspect of the problem gives rise to demand for auditing by the licensor. We characterize the optimal royalty contract, accounting system choice by the licensee, and audit strategy choice by the licensor. We show when the owner prefers to license the property in exchange for a royalty and when it prefers to use the property directly. We also show that the internal control provisions of section 404 of Sarbanes-Oxley make royalty arrangements based on self-reporting more attractive.
Notes: "June 2007"--Added t.p.

Includes bibliographical references.