need help with 1, 2, 3

Zhang (2005) examined revenue recognition practices in the software industry. Software firms derive revenue from software licensing and post-contract customer support. In both cases, the point in time when the significant risks and rewards of ownership have been transferred to the buyer, the seller loses control over the items, the revenue and related costs can be measured reliably, and collection is reasonably assured is unclear. Consequently, there is scope for alternative revenue recognition practices in the industry. With respect to licensing, one alternative is to recognize revenue when the licensing contract is signed (early recognition). Another is to wait until the software is delivered to the customer, consistent with the usual sale basis of revenue recognition (late recognition). With respect to post-contract customer support, alternatives are to recognize revenue when contracts are signed (early recognition) or recognize revenue ratably over the term of the contract (late recognition) Zhang examined a sample of 122 firms over 1987-1997, of which 22 firms were early recognizers and 93 late. He measured the relevance of a firm's quarterly revenue by its association with its share returns for the quarter. Given securities market efficiency, revenues of early recognizers should be more highly associated with their share returns than revenues of late recognizers. Zhang reported significant statistical evidence consistent with this expectation. Zhang measured the reliability of revenue information by cxamining the cash flows from quarter-end accounts receivable collected over the following two quarters. The closer are the amounts of cash collections over these following two quarters to opening net accounts receivable, the more reliable the revenue information. Zhang found that the reliability of revenue information measured this way was significantly less for early recognizers than for late recognizers. Combination of these two findings suggests that relevance and reliability must be traded off, since the greater relevance of early revenue is accompanied by reduced reliability. Required: 1. Explain why securities market efficiency implies that revenues of early recognizers should be more highly associated with their share returns than revenues of late recognizers. In your answer, assume that information about licensing contracts becomes public information when the contract is signed. 2. Explain why the closer are cash collections for the following two quarters to opening accounts receivable, the more reliable is revenue information. 3. Do Zhang's findings imply that early revenue recognition for licensing contracts has the potential to be decision useful for investors