The value relevance of revenue for Internet firms: Does reporting grossed-up or Barter revenue make a difference?

This study provides evidence on (a) the market's response to revenue and revenue announcements, (b) the extent of the use of grossed-up and barter revenue by Internet firms, and (c) whether the value relevance of revenue differs when Internet firms report grossed-up or barter revenue. Results indicate that revenue announcements are highly associated with three-day market returns and provide information incremental to that contained in earnings announcements. The rise of grossed-up and barter revenue is common for certain sectors of Internet firms, but not pervasive across sectors. Evidence suggests that the value relevance of revenue for firms reporting grossed-up and barter revenue declined subsequent to the "crash" in April 2000. Additional analyses explore the effect of actin e individual investors on the pricing of revenue for firms reporting grossed-up and barter revenue. Findings suggest higher pricing of revenue for firms reporting grossed-up or barter revenue with relatively greater individual investor following.