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Revenue recognition and channel stuffing in the Taiwanese semiconductor industry

Author

Listed:
  • Chii-Shyan Kuo

    (National Taiwan University of Science and Technology)

  • Jia-Jye Yu

    (National Taiwan University of Science and Technology)

  • Feng-Chen Chang

    (National Taiwan University of Science and Technology)

Abstract

This paper examines whether a new revenue recognition standard, namely International Financial Reporting Standard 15 Revenue from Contracts with Customers (IFRS 15), incentivizes Taiwanese semiconductor companies to employ channel stuffing (CS) to meet or beat their earnings targets. By using a sample comprising 1399 firms listed on the Taiwanese Stock Exchange and over-the-counter markets between 2013 and 2019, we find that compared with Taiwanese firms in other sectors, semiconductor companies in Taiwan are more likely to employ CS to meet their earnings targets. Moreover, Taiwanese semiconductor companies have become more likely to use CS to meet their earnings targets since the implementation of IFRS 15. The obtained results pass a series of robustness checks and may help the potential driving forces for CS to be understood.

Suggested Citation

  • 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.
    • Handle: RePEc:pal:ijodag:v:19:y:2022:i:3:d:10.1057_s41310-022-00144-6
    DOI: 10.1057/s41310-022-00144-6
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Earnings management; Channel stuffing; Revenue recognition;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue

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