پیامدهای ارزیابی تغییرات نظارتی در شناخت درآمد : مدارک و شواهد از تبلیغات فروش تهاتری

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.

This study examines the valuation consequences of advertising barter sales recognized under APB Opinion No. 29, Accounting for Nonmonetary Transactions (APB 29; APB, 1973), relative to similar transactions recorded under EITF Issue No. 99-17, Accounting for Advertising Barter Transactions (EITF 99-17; FASB, 2002). Under APB 29, which governs the accounting for all nonmonetary transactions, advertising barter sales were recorded at fair value. The perception that managers of Internet-related firms were artificially inflating the fair value of these transactions led to regulatory intervention in the form of EITF 99-17, which provides strict guidelines regarding the measurement and recognition of advertising barter revenues. We utilize this regulatory transition to examine how the change from a principle-based to a rule-based system of measurement with reduced managerial discretion affected investor perception of the quality of reported revenues. Specifically, we examine whether the revenues reported in accordance with EITF 99-17 are more credible than revenues reported in accordance with APB 29. If the market anticipated an ‘average’ overstatement of revenues under APB 29, and if this perceived overstatement decreased under EITF 99-17, then valuation multiples are likely to change in a predictable manner. The Deloitte Forensic Center (2007) examined all Accounting and Auditing Enforcement Releases (AAERs) by the SEC between January 2000 and December 2006, identifying 344 AAERs related to financial statement fraud. These 344 AAERs encompassed 1240 different fraud schemes, of which 41% related to revenue recognition. Recording fictional revenue was the most common type of revenue recognition fraud, followed by recognizing inappropriate revenue from swaps, round-tripping, or barter arrangements. Thus, a key motivation for this study is the concern expressed by the SEC about revenue recognition practices.

The present study utilizes a model of price-to-sales ratios to compare the valuation of advertising barter sales recognized under APB 29 to that of similar transactions recognized under the more strict requirements of EITF 99-17. Subject to the caveats noted below, the results are consistent with the market discounting the value relevance of barter sales recorded by e-tailers under APB 29 relative to other sources of revenue. In contrast, we find evidence that similar transactions recognized under EITF 99-17 were valued comparable to other sources of revenue. This change in value relevance is consistent with increased credibility of recorded barter revenue under the more strict guidance of EITF 99-17. Overall, these results have implications for revenue recognition practices, revenue-based valuation, and accounting regulation. As with most studies, our research has certain limitations and hence caution must be exercised in any generalization of our results. First, our results are based on a modest sample of firms in a particular industry over a two-year time period. In this regard, the existence of statistically significant coefficient estimates with economically plausible signs indicates that sample size is not a problem with the model estimation. Second, we are unable to test explicitly for any change in managerial behavior from the pre- to the post-EITF 99-17 periods.