Answers are grounded in this paper and cite their sources.
Empirical analysis reveals enhanced price efficiency and analyst forecast accuracy following ASC 606 implementation, indicating improved accounting informativeness across public markets.
We show that earnings announcements are accompanied by larger decreases in the bid–ask spread and the price impact of trades and a larger increase in price efficiency following the implementation of the new revenue recognition standard (Accounting Standards Codification 606 [ASC 606]). The implementation of ASC 606 is associated with a significant increase in the accuracy of analysts’ revenue and earnings forecasts and a decrease in the post‐earnings announcement drift (PEAD). These results indicate that ASC 606 has improved the informativeness of earnings and altered the effect of earnings announcements on the firm's information and trading environments.
No takes yet. Share an insight, caveat, or question.
Chung et al. (2026) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: