Nonprofessional investors' perceptions of the efficiency and effectiveness of XBRL-enabled financial statement analysis and of firms providing XBRL-formatted information

Abstract

Businesses continually invest in new information technologies (IT) for improved reporting. EXtensible Business Reporting Language (XBRL) is an example of IT that allows financial statements to be transmitted and analysed electronically. The international business community has shown strong support for XBRL, with several countries mandating financial reporting using XBRL. However, even though organisations may be required to transmit XBRL-formatted financial statements, users of such statements would still need to choose whether or not they wish to analyse them with XBRL-enabled analysis tools. Earlier research indicates that the individual user's perceptions of IT tools are frequently negatively biased and that IT tools are commonly underused as a result. If this general finding were to be true for XBRL use, it could seriously affect XBRL's diffusion into the business community. The authors, both CPAs and accounting professors, investigate the relationship between XBRL use and perception by surveying 61 MBA students as proxies for nonprofessional investors. Results indicate that although perceptions of XBRL are generally positive, increased use of XBRL leads to more positive perceptions. Thus, organisations promoting the spread of XBRL should consider making access to XBRL analysis tools as easy and widely available as possible. Additionally, organisations that issue XBRL-formatted reports are perceived more positively than ones that do not issue such reports (a halo effect).