The challenges of improving revenue-recognition standard for multiple-element firms : evidence from the software industry (SOP 97-2) /
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| Format: | Thesis eBook |
| Language: | English |
| Published: |
[College Station, Tex.] :
[Texas A&M University],
[2008]
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| Online Access: | Link to OAK Trust copy |
| Abstract: | I investigated whether implementing SOP 97-2, the revenue-recognition standard for the software industry, reduces earnings informativeness. This standard is particularly important for two reasons: First, its provisions coincide with provisions of SAB 101, the current general revenue-recognition standard. Second, the software industry provides a laboratory setting for examining multiple-element firms, whose revenue-recognition challenges keep mounting as more and more firms bundle multiple products and services. I found that implementing SOP 97-2 leads to additional revenue deferrals and a decline in earnings informativeness. However, the market prices these deferrals as revenues, as if these amounts had not been deferred. Moreover, the proforma earnings, which I calculated by undoing the revenue deferrals, more strongly correspond with market returns than do the reported earnings. My findings indicate that the accounting numbers calculated using the pre-SOP 97-2 revenue-recognition rules more strongly correspond with market returns than do those calculated using SOP 97-2. My findings should interest FASB in its project on developing a new revenue-recognition standard. |
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| Item Description: | "Major Subject: Accounting" Title from author supplied metadata (automated record created on Oct. 13, 2008.) Vita. Abstract. Electronic resource. |
| Format: | Mode of access: World Wide Web. System requirements: World Wide Web access and Adobe Acrobat Reader. |
| Bibliography: | Includes bibliographical references. |