Timing of Revenues and Expenses: Evidence from Finland

In accounting, a critical issue is the timing of revenues and expenses in annual closing accounts. If expenditures are expired as faster than generated, expense method accelerated. opposite case, decelerated. Thus, (time lags) an important determinant earnings profitability. The objective this study to analyze critically alternative methods estimate time lags expenses. Six different based on correlation, return investment, logarithmic differences, unrestricted OLS, restricted Solver optimization analyzed. Empirically, these applied nine-year series financial statements from sample 697 Finnish firms. Empirical analyses show that still have deficiencies potentially lead unreliable results timing. future, more research topic called for.