Abstract

This study examines the value relevance of unbilled revenue, which has been classified in the statement of financial position since the introduction of K－IFRS. In addition, this study examines how non－Big4 auditors and the ratio of unbilled revenue to sales affect the value relevance of unbilled revenue. The empirical results of this study are as follows. First, unbilled revenue of the construction industry shows significant value relevance with stock price. Second, the value relevance of unbilled revenue of a construction company audited by a non－Big4 auditor is lower than the value relevance of a construction company audited by a Big4 auditor. Third, the value relevance of unbilled revenue of a construction company with a high ratio of unbilled revenue to sales is not significantly different from the value relevance of a construction company with a low ratio of unbilled revenue to sales. However, it is only after 2013 that the media is notified that there is a high possibility of abnormal unbilled revenue if the ratio of unbilled revenue to sales is high. In the case of the analysis after 2013, the value relevance of unbilled revenue of a construction company with a high ratio of unbilled revenue to sales is lower than the value relevance of a construction company with a low ratio of unbilled revenue to sales. This study contributes to the study of the value relevance of unbilled revenue by distinguishing between normal unbilled revenue and abnormal unbilled revenue.

Keywords

• construction industry
• unbilled revenue
• value relevance
• the ratio of unbilled revenue to sales

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