Document Type



Doctor of Business Administration


Business Administration

Date of Defense


Graduate Advisor

Jennifer W. Chen, Ph.D.


Tom Kozloski, Ph.D.

Michele Meckfessel, Ph.D.


The Financial Accounting Standards Board has issued a new revenue standard through a series of updates since May 2014 (collectively, ASC 606). The standard allowed firms to adopt it a year early before the required effective date. This study provides evidence of the adoption effects of ASC 606 on firms’ financials and examines the relationship between the likelihood of early adopting ASC 606 and firm-specific characteristics. The results show that early adopters are distributed across 12 industries and 40% of them are concentrated in the computer programming and software industry. Early adopters in the software industry reported the largest cumulative adoption effects in dollars on retained earnings. Overall, the majority of the sample firms (83%) reported positive adoption effects on financial statements and the adoption of ASC 606 increased their retained earnings by 2.95% on average. The results also show that most early adopters chose the full retrospective method while the majority of industry-size-matched non-early adopting peers chose the modified retrospective method. Finally, the multivariate regression analyses suggest that early adopters are associated with decreased earnings in the year before adoption and more favorable adoption effects than non-early adopting peers.

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Accounting Commons