When are concurrent quarterly reports useful for investors? Evidence from ASC 606

53 Pages Posted: 27 Jul 2020 Last revised: 12 Feb 2021

See all articles by Jesse Glaze

Jesse Glaze

University of Colorado at Boulder - Leeds School of Business

A. Nicole Skinner

University of Georgia - J.M. Tull School of Accounting

Andrew Stephan

University of Colorado at Boulder Leeds School of Business

Date Written: February 12, 2021

Abstract

We examine whether concurrent quarterly reports help investors respond to earnings news when uncertainty is high. Although existing studies suggest that quarterly reports released concurrently with earnings depress trading due to information overload, we predict that concurrent reports help investors trade when they face uncertainty about how to interpret earnings news. We rely on the implementation of ASC 606 as a quasi-exogenous increase in uncertainty about how to respond to earnings news. Specifically, we find that when uncertainty is high in the first quarter of ASC 606 implementation, 10-Qs released concurrently with earnings are associated with increased trading in response to earnings news. We find the relation is stronger when firms face greater uncertainty and when firms include more discussion of revenue recognition. Our results suggest that concurrent quarterly reports are informative to investors when uncertainty is especially high.

Keywords: Voluntary disclosure, mandatory disclosure, information uncertainty, accounting change, ASC 606, earnings announcements

JEL Classification: G14, M41

Suggested Citation

Glaze, Jesse and Skinner, Ashley Nicole and Stephan, Andrew, When are concurrent quarterly reports useful for investors? Evidence from ASC 606 (February 12, 2021). Available at SSRN: https://ssrn.com/abstract=3639777 or http://dx.doi.org/10.2139/ssrn.3639777

Jesse Glaze

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

Ashley Nicole Skinner (Contact Author)

University of Georgia - J.M. Tull School of Accounting ( email )

Athens, GA 30602
United States

Andrew Stephan

University of Colorado at Boulder Leeds School of Business ( email )

419 UCB
Boulder, CO 80309-0419
United States

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