Earnings Management in the Pre and Post eXtensible Business Reporting Language Period in Indonesia

This study aims to determine and analyze the impact of XBRL adoption on earnings management conducted by company management in Indonesia. Earnings management in this study is proxied by discretionary accruals. The population of this research is manufacturing companies listed on the Indonesia Stock Exchange. The research sample was selected using the purposive sampling method. The total sample of this research is 15 manufacturing companies. This research period includes the period before the adoption of XBRL (2012-2014) and the period after the adoption of XBRL (2015-2017). Hypothesis testing is done by a paired sample t-test. The results of hypothesis testing indicate that there are significant differences between the levels of earnings management in the period before and after the adoption of XBRL. These results reveal that the adoption of XBRL can limit the opportunistic behavior of management in presenting financial reporting. These results also reveal that the adoption of XBRL can improve the quality of financial reporting

Homogenization and comparability of financial information through XBRL

RESUMEN: Los constantes cambios del mercado han creado la necesidad de aplicar sistemas de información financieros más confiables y comparables, de manera que el lenguaje de los negocios sea cada vez más generalizado. El XBRL como lenguaje estándar permite que los reportes contables y financieros de una entidad sean leídos y entendidos en cualquier lugar del mundo, de manera que guarden simetría y den transparencia frente a la información que se reporta. Este trabajo realiza un estudio comparativo entre los países con mayores fuentes de experiencia en la aplicación de la herramienta XBRL y el caso colombiano, con el objetivo de reflejar las ventajas y desventajas que conlleva la implementación de esta herramienta. Se evidencia que la herramienta se ha ido constituyendo más en un proceso de verificación de información para los organismos de control que en un lenguaje estándar para disminuir la asimetría y la transparencia en las revelaciones.ABSTARCT: Constant changes in the market have created the need of applying more reliable accounting information systems, in a way that the business language becomes increasingly generalized. XBRL as a standard language provides the possibility that the accounting and financial reports be read and understood in anywhere in the world, so that they have symmetry and are transparent in the reported information. A comparative study is carried out in this work, between the countries the most experienced in the application of this tool XBRL, and the Colombian case, the last with the aim of reflecting the advantage and disadvantages involved in the implementation of this tool. Finally, it is evidenced that the tool has been constituted more as a verification process for control bodies than as a standard language to decrease the asymmetry and transparency in the revelations

Twenty Years of XBRL: What We Know and Where We Are Going

Purpose This paper extends the knowledge of eXtensible Business Reporting Language (XBRL) to synthesize what twenty years of accounting and business literature on XBRL suggests about the effective improvement from its implementation in financial reporting. Design/methodology/approach A systematic literature review and bibliometric analysis of 142 articles resulted in the identification of five primary research streams: adoption issues; financial reporting; decision-making processes, market efficiency and corporate governance; audit and assurance issues; and non-financial reporting. Findings The results reveal a scarcity of studies devoted to explicating the consequences of XBRL implementation on financial reporting. Also, some papers’ results question the usefulness of the language on the decision-making process. The overall lack of literature concerning the impact of XBRL on financial statement preparers, especially with reference to SMEs, is evident. Moreover, the consequences on corporate governance choices and the relevant internal decision-making processes are rarely debated. Research limitations/implications The findings are useful for users of companies’ financial disclosure policies, particularly for regulators who manage XBRL implementation in countries where XBRL has not yet been adopted as well as for others working in specific areas of financial disclosure, such as non-financial reporting and public sector financial reporting. Originality/value This study differs from previous literature on XBRL as it focuses on a wider period of analysis and offers a unique methodology – combination of bibliometric and systematic review – as well as a business perspective for deepening XBRL

Empirical investigations into corporate reporting in Europe: A financial market perspective on determinants and consequences of sustainability and digital reporting

This paper-based dissertation comprises five essays dealing with corporate sustainability and digital reporting and is structured in six chapters. The first chapter is the introduction and provides an overview of the structure and aims of the dissertation, lays out the contribution of the work, and introduces the five manuscripts. The second chapter, respectively the first manuscript, deals with the consequences of mandatory sustainability reporting in Europe. Specifically, the study deals with the question whether Directive 2014/95/EU has achieved its objectives of increasing reporting quantity and quality. In the third chapter, the sustainability reports of the largest European firms are analyzed using computer-aided text analysis. This study investigates whether and how external assurance of sustainability reports is beneficial from the viewpoint of report transparency, which is proxied by reporting scope, optimism, and readability. In the fourth chapter, the role of corporate sustainability in the context of M&A transactions is examined, precisely whether sustainability influences the premia paid in M&A transactions. The fifth and the sixth chapters center around the voluntary usage of online financial reporting (OFR) in Europe. While the fifth chapter is concerned with the usage and empirical determinants of OFR, the analysis in the sixth chapter examines the impact of OFR on the financial market, specifically on analyst following and stock liquidity

Empirical Research on Financial Notes to the Accounts and Earnings Management

Managers can influence the amount of net income their firm reports by variation in the application of accounting policies or by making real cash flow decisions. 'Earnings management' is the term given when such choices or decisions distort the fair presentation of earnings. Such earnings management activities can lead to negative consequences in the long-term. Accounting scandals in the past have shown that earnings management can even threaten the existence of a firm. Therefore, it is of crucial importance to detect and restrict earnings management. The notes to the accounts can provide information, which is otherwise not presented on the face of the financial statements. Especially the accounting policy disclosures improve the understanding about a firm’s current and future earnings. According to the comparability theory, there should be comparable accountings of firms in the same industry that are subject to similar economic events. Extending this theory, managers of comparable firms should translate the same economic events into similar notes to the accounts and contain similar earnings and discretionary accruals. Therefore, this PhD thesis examines whether similar notes to the accounts are negatively associated with a firm’s propensity to manage earnings. This means that the effect of similar textual accounting policy disclosures or rather notes relative to other firms in the same industry is tested on both, accrual-based and real earnings management proxies. This research uses detail-tagged XBRL notes from SEC EDGAR system as data source. To operationalize the within-industry similarity of the XBRL-formatted notes, the co-sine similarity measure was utilized in this study. Two different similarity scores of the notes are adopted. First, the full set of accounting policy disclosures and second, the revenue recognition disclosures. The key findings demonstrate that firms with more similar notes of the previous year conduct less accrual-based earnings management activities in the following fiscal year. Also, the empirical analyses show that more similar accounting policy and revenue recognition disclosures are negatively associated with real earnings management activities. Collectively, these results indicate that firms with an overall better accounting information environment as measured by more similar notes, relative to industry peers, engage in less accrual-based and real earnings management activities in the following year

Silence in Market Reaction to Annual Reports

Research problem - The literature suggests that the market either does not react or reacts with a delay to the content of annual reports, concerning notion given their importance for investment decisions due to the value relevance of the information they convey. According to the Efficient Market Hypothesis, the market should exhibit a prompt reaction to their release. Rationale - This study aims to uncover the underlying reasons for investors' lack of response to annual report filings. It predicts that the reaction depends, among other factors, on the release of preliminary disclosures of financial results, the method of distribution of annual reports and the length of an annual disclosure. The study examines the market reaction to FTSE100 companies' annual reports from 2006 to 2016. It also considers investor response to preliminary statements of annual. Specifically, it investigates whether investors react more promptly to preliminary disclosures compared to the more detailed annual reports, and how the absence of such preliminary reports might shift attention and reaction time to the information content of annual reports. Furthermore, the study examines changes in the market reaction associated with the shift from a paper-based submission system to the electronic National Storage Mechanism (NSM). This comparison aims to assess whether technological advancements in the dissemination method of corporate disclosure have improved market efficiency and accelerated investors’ response time. Lastly, the study investigates the effect of report length on the market, specifically looking at whether the market reacts differently to lengthier reports compared to those that are more concise. Research methods - To test the efficiency of market reactions, the researcher employs a short-run event study methodology to assess the impact of filings of annual reports on companies’ returns. The study determines whether the filing events captured abnormal returns compared to what would be expected if no filings occurred. If such abnormal returns are observed, it is concluded that the event impacted the companies' returns and that the market reacted efficiently to these filings. The event study, applied to all five enquiries, is followed by further tests on the impact of lengthy reporting on the market reaction using regression analysis. This additional analysis allows for the validation of findings by accounting for time, industry trends, and companies' specific characteristics. The model is tested for potential statistical issues, including non-stationarity, heteroscedasticity, multicollinearity and endogeneity, to ensure the reliability and consistency of the coefficient estimates. Main results - The study's results are mixed. It reveals no immediate abnormal reaction to the information content of annual reports. In contrast, the market shows a strong response to preliminary statements of annual reports. Additionally, contrary to the prediction, there is no evidence of the market responding to the content of annual reports in the absence of preliminary statements. Regarding dissemination methods, an abnormal price change is noted, but only in the first year following the National Storage Mechanism (NSM) adoption. Lastly, the study finds evidence supporting the impact of reporting length; investors tend to discount lengthy annual reports while reacting positively to more succinct ones. Conclusion - The study’s findings challenge the Efficient Market Hypothesis by showing a lack of market reactions to the information content of annual reports. This suggests that policies should emphasise the importance of report readability and simplicity to prompt quicker and more efficient investor responses. Specifically, the market tends to react negatively to lengthy reports, while succinct reports cause a positive response, indicating a policy need for guiding companies towards more concise reporting, including setting standards for report length. In the final section, the study points out the potential of artificial intelligence AI and machine learning in improving market efficiency by condensing reports, processing complex information effectively and analysing underlying sentiments and patterns in financial reporting, which can be important for detecting anomalies or obfuscation. This can aid in developing more informed and timely trading strategies, especially when the market underreacts or reacts with a delay to new information. Overall, the study advocates for policy changes that promote report clarity, technological advancement for better access to corporate disclosures and the use of AI to enhance market efficiency and investor protection

Journal of Information Systems : Volume 29, Nomor 3, Fall 2015

ACADEMIC ARTICLES 1. Form 4 Electronic Submissions and the Thompson Reuters Insider Filing Data Feed : Discrepancies and Their Impact on Research / Juergen Sidgman 2. YouTube Sustainability Reporting : Empirical Evidence from Eurozone-Listed Companies / Enrique Bonson, Michaela Bednarova 3. The Association Between XBRL Adoption and Market Reactions to Earnings Surprises / Ju-Chun Yen, Tawei Wang 4. The Association Between Extensions in XBRL Disclosures and Financial Information Environment / Shiyou Li, Emeka T. Nwaeze 5. Voluntary Disclosures via Social Media and the Role of Comments / Brad S. Trinkle, Robert E. Crossler, France Belanger 6. Organizational Competencies and Dynamic Accounnting Information System Capability: Impact on AIS Process and Firm Performance / Acklesh Prasad Peter Green COMMENTARIES 7. From Bean Counters to Bean Growers: Accountants as Data Analysts-A Customer Profitability Exampl