The role of revenue recognition in performance reporting

Alfred Wagenhofer

Accounting and Business Research, 2014, vol. 44, issue 4, 349-379

Abstract: This paper examines revenue and profit or loss recognition and how these measures provide financial information about companies' performance. First, I review academic literature that examines the importance of revenue in informing capital markets and in performance evaluation and discuss findings on revenue management. Second, I describe fundamental revenue recognition concepts developed in the academic literature based on the economics of risks involved in the earnings cycle. Third, I evaluate the new revenue recognition standard of the International Accounting Standards Board, which aims to state a single consistent criterion for revenue recognition. I argue that striving for a conceptually consistent standard is undesirable because the economic characteristics of earnings cycles differ across firms and so does the usefulness of information. Consistent with that, the new standard actually contains different recognition criteria, does not fully follow the asset-liability approach and, although the Conceptual Framework favours neutrality over conservatism, includes several instances of conservatism.

Date: 2014
References: View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://hdl.handle.net/10.1080/00014788.2014.897867 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:acctbr:v:44:y:2014:i:4:p:349-379

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RABR20

DOI: 10.1080/00014788.2014.897867

Access Statistics for this article

Accounting and Business Research is currently edited by Vivien Beattie

More articles in Accounting and Business Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().