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The real effects of a new accounting standard: the case of IFRS 15 Revenue from Contracts with Customers

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  • Christopher J. Napier
  • Christian Stadler

Abstract

International Financial Reporting Standard 15 (IFRS 15) Revenue from Contracts with Customers has significantly changed the philosophy of revenue recognition, not only to provide a fairer representation of corporate revenues, but also to inhibit the use of revenues for ‘earnings management’ purposes. We provide a framework to analyse the various effects of new and amended accounting standards. Changes in how companies recognise, measure, present and disclose their revenues (accounting effects) can affect how companies and their transactions are understood, both internally and externally (information effects), can change security prices (capital market effects) and can change how companies operate, and their costs and cash flows (real effects). We provide empirical evidence, based on a review of corporate annual reports, comment letters and interviews, on the effects of IFRS 15. We find evidence of accounting, information and, to a lesser extent, real effects, although, outside a few industries, IFRS 15 has had relatively little impact on the recognition and measurement of revenue.

Suggested Citation

  • Christopher J. Napier & Christian Stadler, 2020. "The real effects of a new accounting standard: the case of IFRS 15 Revenue from Contracts with Customers," Accounting and Business Research, Taylor & Francis Journals, vol. 50(5), pages 474-503, July.
    • Handle: RePEc:taf:acctbr:v:50:y:2020:i:5:p:474-503
    DOI: 10.1080/00014788.2020.1770933
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    Cited by:

    1. Chii-Shyan Kuo & Jia-Jye Yu & Feng-Chen Chang, 2022. "Revenue recognition and channel stuffing in the Taiwanese semiconductor industry," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(3), pages 352-361, September.
    2. Alberto Quagli & Elisa Roncagliolo & Gabriele D’Alauro, 2021. "The preparedness to adopt new accounting standards: a study of European companies on the pre-adoption phase of IFRS 15," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(3), pages 290-303, September.
    3. Usurelu Valentin Ioan & Dutescu Adriana, 2021. "The impact of COVID 19 crisis on revenue recognition for telecommunications sector," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 15(1), pages 793-810, December.
    4. Sebastian Onie & Le Ma & Helen Spiropoulos & Peter Wells, 2023. "An evaluation of the impacts of the adoption of IFRS 15 Revenue from Contracts with Customers," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 953-973, April.
    5. Kabir, Humayun & Su, Li, 2022. "How did IFRS 15 affect the revenue recognition practices and financial statements of firms? Evidence from Australia and New Zealand," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 49(C).
    6. Sophia M. Brink & Gretha Steenkamp, 2023. "An IFRS Decision Heuristic—A Model for Accounting for Credit Card Rewards Programme Transactions," JRFM, MDPI, vol. 16(3), pages 1-17, March.

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