Title
Deferred revenue changes as a leading indicator for future financial performance: Evidence from China
Document Type
Article
Department or Administrative Unit
Finance and Supply Chain Management
Publication Date
12-4-2017
Abstract
Purpose
The purpose of this paper is to investigate whether deferred revenue changes can serve as a leading indicator for firms listed on China’s stock markets, and whether China’s market participants can appropriately incorporate future performance implications of deferred revenue changes.
Design/methodology/approach
Empirical/archival/regression analysis.
Findings
The authors find that deferred revenue changes are positively associated with the next two years’ sales growth, gross profit margin, profit margin, and return on assets, suggesting that deferred revenue changes can serve as a valid leading indicator for future financial performance. The authors also find that Chinese investors tend to underweight future performance implications of deferred revenue changes.
Originality/value
To the authors’ knowledge, this study is among the first research to examine deferred revenue changes as a leading fundamental indicator and market underreaction to reported accounting information for firms listed on China’s stock markets.
Recommended Citation
Zhong, K., Wang, F., & Zhou, L. (2017). Deferred revenue changes as a leading indicator for future financial performance. Asian Review of Accounting, 25(4), 549–568. https://doi.org/10.1108/ara-11-2015-0118
Journal
Asian Review of Accounting
Rights
Copyright © 2017, Emerald Publishing Limited
Comments
This article was originally published in Asian Review of Accounting. The full-text article from the publisher can be found here.
Due to copyright restrictions, this article is not available for free download from ScholarWorks @ CWU.