The ASC 606 Standard, Revenue Informativeness, and Analysts Forecast Quality

We examine the adoption effect of ASC 606 on revenue informativeness, analyst forecast dispersion, and forecast errors. We find that the adoption of ASC 606 is associated with increases in revenue informativeness but decreases in analyst forecast accuracy and consensus. Such adoption effects are mainly temporary and focused in firms that are more affected by the new standard. Last, we find that firms using the full retrospective adoption method are associated with higher revenue informativeness and lower analyst forecast error than firms using the modified retrospective method