Revenue recognition timing and attributes of reported revenue: The case of software industry's adoption of SOP 91-1

• 成果类型: Article
• 署名作者: Zhang, Y
• 署名单位: Columbia University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2005.04.003
• 发表日期: 2005
• 关键词: accounting earnings; predictive-ability; VALUE-RELEVANCE; determinants; accruals; QUALITY; share

摘要

I examine how revenue recognition timing affects attributes of reported revenue, using a sample of software firms that adopted Statement of Position 91-1 in the early 1990s. I find early recognition yields more timely revenue information, as evidenced by higher contemporaneous correlation with information impounded in stock returns. However, such early recognition diminishes the extent to which accounts receivable accruals map into future cash flow realizations and lowers the time-series predictability of reported revenue. Overall, the results suggest early revenue recognition makes reported revenue more timely and more relevant. but at the cost of lower reliability and lower time-series predictability. (c) 2005 Elsevier B.V. All rights reserved.