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The Value Relevance of Revenue for Internet Firms: Does Reporting Grossed‐up or Barter Revenue Make a Difference?
Author(s) -
Davis Angela K.
Publication year - 2002
Publication title -
journal of accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 6.767
H-Index - 141
eISSN - 1475-679X
pISSN - 0021-8456
DOI - 10.1111/1475-679x.00056
Subject(s) - barter , revenue , revenue model , revenue recognition , business , earnings , revenue center , value (mathematics) , the internet , revenue management , relevance (law) , monetary economics , finance , economics , accounting , accounting information system , market economy , financial accounting , machine learning , world wide web , computer science , political science , law
This study provides evidence on (a) the market’s response to revenue and revenue announcements, (b) the extent of the use of grossed‐up and barter revenue by Internet firms, and (c) whether the value relevance of revenue differs when Internet firms report grossed‐up or barter revenue. Results indicate that revenue announcements are highly associated with three‐day market returns and provide information incremental to that contained in earnings announcements. The use of grossed‐up and barter revenue is common for certain sectors of Internet firms, but not pervasive across sectors. Evidence suggests that the value relevance of revenue for firms reporting grossed‐up and barter revenue declined subsequent to the “crash” in April 2000. Additional analyses explore the effect of active individual investors on the pricing of revenue for firms reporting grossed‐up and barter revenue. Findings suggest higher pricing of revenue for firms reporting grossed‐up or barter revenue with relatively greater individual investor following.