Valuation consequences of regulatory changes in revenue recognition: Evidence from advertising barter sales
Equity valuation, Price-to-sales ratio, Regulation, Revenue recognition
Advances in Accounting
This study compares the valuation of advertising barter sales recognized under APB Opinion No. 29, relative to transactions recorded under EITF Issue No. 99-17. EITF 99-17 was the FASB's response to the perception that Internet-related firms were overstating revenue. The results indicate an inverse relation between price-to-sales ratios and the amount of advertising barter recorded under APB 29 by e-tailing firms. In contrast, we find no evidence of a discount for similar transactions recognized under EITF 99-17. This change in value relevance is consistent with increased credibility of recorded revenue. These results have implications for revenue recognition practices and accounting regulation. © 2010 Elsevier Ltd.
Original Publication Date
DOI of published version
Bauman, Christine C.; Bauman, Mark P.; and Das, Somnath, "Valuation consequences of regulatory changes in revenue recognition: Evidence from advertising barter sales" (2010). Faculty Publications. 2042.