Managing discretion: Revenue recognition in the mobile gaming industry - By Associate Professor Lisa Baudot

Dr. Lisa Baudot is Associate Professor of Accounting and Management Control at HEC Paris. Her research currently focuses on contemporary debates in corporate responsibility, digitalization and AI, and purposeful work. She has published in leading journals, including Accounting, Auditing & Accountability Journal, Accounting, Organizations and Society, Contemporary Accounting Research, Critical Perspectives on Accounting, Journal of Business Ethics, Journal of Management Studies, and The Accounting Review.

Dr. Baudot has received multiple best paper awards from the American Accounting Association (AAA) and holds editorial board positions at Auditing: A Journal of Practice & Theory, European Accounting Review, and The Accounting Review. She currently serves as Associate Editor for Accounting Horizons and Critical Perspectives on Accounting.

Prof Baudot will present a paper titled: Managing discretion: Revenue recognition in the mobile gaming industry

This paper examines how principles-based accounting standards are

operationalized in practice through a study of revenue recognition. Drawing on a longitudinal case of a major European game publisher and the wider mobile gaming industry, we explore how the sale of virtual goods becomes recognized and deferred revenue under IFRS 15. Conceptually, we consider the operationalization of revenue standards in practice through perspectives on the socially constructed nature of managerial discretion. We show that revenue recognition is inherently discretionary not simply because preparers choose among alternatives, but because the object of discretion is unstable and constructed. We also show how preparers interface with both internal and external networks to reach an alternative that makes revenue calculable and defensible. In doing so, we highlight four facets of discretion: generated in the construction of virtual objects, translated in connecting virtual objects with the “real” world, facilitated within data infrastructures, and limited by what is defensible. We contribute to the qualitative financial accounting literature by illuminating the way in which principles-based revenue standards are made workable, and by offering a nuanced account of discretion as a managed outcome of operationalizing accounting in contemporary business models.