An international comparison of the determinants and financial information quality in XBRL reporting environment

The rapid development of technology had impacted the way businesses communicate information to the stakeholders.eXtensible Business Reporting Language (XBRL) offers the ability to exchange financial information globally through a digitalized global standard language.To reduce information asymmetry, most studies on XBRL were carried out emphasizing on the reasons for the new technology adoption and intention for implementation, but studies on XBRL implications or effectiveness are still scarce.Expected to improve firm information dissemination, the post-implementation studies give more focus on the data quality and usage, but still no attempt to examine the effect of XBRL adoption on the quality of another means for information sharing, the internet financial reporting.Hence, this study aims to evaluate the differences (if any) in the quality of internet financial reporting of companies operating in the XBRL-mandated countries and companies operating in non-XBRL mandated countries

A review of the study on the impacts of the Extensible Business Reporting Language (XBRL)

eXtensible business reporting language (XBRL) is an electronic tool with the acceptable global standard for the electronic financial data to communicate and to be compiled, analyzed and shared among the stakeholders. The implementation of XBRL brings some benefits and impacts to all of the users of financial reports. This study aims to identify the research trends on the impact of XBRL and issues related to it. Forty-six articles related to the impact of XBRL was extracted from the Scopus database and Google Scholar. The result from the study found that a study regarding the XBRL impact has shown slightly increase until 2014 but has not grown much since then. There are a few perspectives that have been discovered to investigates on how XBRL affected certain users of the financial reports. This study will give a general picture of the current research on the impact of XBRL, the trend, and future direction of the research related to the XBRL

Financial Reporting in XBRL. First Evidence on Financial Statement Notes of Italian Unlisted Companies

The new taxonomy 2014-11-17 mandates Italian unlisted companies to codify in XBRL also the notes to the financial statements. Building on previous literature, the aim of this study is to analyze the impact of mandatory XBRL extension to the financial statements notes on financial reporting quality of the Italian unlisted companies. We focus our analysis on the taxonomy usage and the customizations made by the filers. Our data represents the very first sample of Italian financial statements filed in fully XBRL format. Despite the significant changes affecting the process of financial statement preparation, we find that Italian unlisted companies have accepted and acknowledged the potential benefits and limits of the new taxonomy. When dividing the notes section between textual blocks and tables, we find a clear preference for the filers to use textual blocks for both, standard and abbreviated financial statements. Overall, we find that filers of both financial statement types use extensively the customizations offered by the taxonomy. Moreover, for the filers of abbreviated financial statements, we show that they tend to use not only more table customizations but also tables that are proper for the standard financial statements, thus offering higher voluntary disclosure

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

The Effect of XBRL and Social Media on Information Asymmetry: Evidence from Bank Loan Contracts

This study analyzes how two information technology advancements, the adoption of XBRL (eXtensible Business Reporting Language), and social media, affect bank loan contracting using a sample of 554 US bank loan contracts in 2011. I hypothesize that the adoption of XBRL and social media can enhance information dissemination and mitigate the information asymmetry problem between borrowers and lenders. Consistent with this hypothesize, I find that borrowers that adopt XBRL and/or receive positive social media user opinion in social media enjoy more favorable price and non-price terms of bank loan contracts. Additional analyses indicate that the relations among XBRL adoption, social media user opinion and bank loan price vary with the firm size, loan structure and availability of public information of borrowers. Overall, this research provides evidence that technology advancements, the adoption of XRBL and social media, reduce cost of bank loans by decreasing information asymmetry between borrowers and lenders

Data Quality Problems Troubling Business and Financial Researchers: A Literature Review and Synthetic Analysis

The data quality of commercial business and financial databases greatly affects research quality and reliability. The presence of data quality problems can not only distort research results, destroy a research effort but also seriously damage management decisions based upon such research. Although library literature rarely discusses data quality problems, business literature reports a wide range of data quality issues, many of which have been systematically tested with statistical methods. This article reviews a collection of the business literature that provides a critical analysis on the data quality of the most frequently used business and finance databases including the Center for Research in Security Prices (CRSP), Compustat, S&P Capital IQ, I/B/E/S, Datastream, Worldscope, Securities Data Company (SDC) Platinum, and Bureau Van Dijk (BvD) Orbis and identifies 11 categories of common data quality problems, including missing values, data errors, discrepancies, biases, inconsistencies, static header data, standardization, changes in historic data, lack of transparency, reporting time issues and misuse of data. Finally, the article provides some practical advice for librarians to facilitate their scholarly communications with researchers on data quality problems

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

An Evaluation of the Current State and Future of XBRL and Interactive Data for Investors and Analysts

In 2009, the Securities and Exchange Commission (SEC) mandated that public companies submit portions of annual (10-K) and quarterly (10-Q) reports—in a digitized format known as eXtensible Business Reporting Language (XBRL). The goal of this type of data was to provide more relevant, timely, and reliable “interactive” data to investors and analysts. The XBRL-formatted SEC filings information is meant to allow users to manipulate and organize the financial information according to their own purposes faster, cheaper, and more easily than current alternatives. But, how useful and usable is the resulting data? The authors—early proponents of interactive data—completed a review of the state of XBRL, with a focus on its usefulness and usability for security analysis. The study found, that investors and analysts question the reliability of the data, the simplicity and stability of the underlying taxonomy and architecture, as well as the lack of user tools that add value and are easily integrated into an investor’s or analyst’s existing work flow and tools. As a result, the researchers conclude that XBRL has promised more than it has delivered to date and is at risk of becoming obsolete for use by analysts and investors. They also offer specific recommendations to filers, regulators, and the XBRL development community that may make the formatted data more useful and useable to the very investors and analysts the SEC's XBRL mandate intended to serve