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

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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.
Original languageEnglish
Pages (from-to)474-503
Number of pages30
JournalAccounting and Business Research
Issue number5
Early online date26 Jun 2020
Publication statusPublished - 26 Jun 2020


  • Financial reporting
  • IFRS 15
  • Revenue
  • Accounting standards
  • Real effects

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