Ontology based integration of XBRL filings for financial decision making

Abstract

In 2008, the US Securities and Exchange Commission (SEC) mandated all tier-1 public companies to report their financial statements in eXtensible Business Reporting Language (XBRL). XBRL has the potential to improve the efficiency and accuracy of financial disclosures, and thereby reduce costs. However, semantic heterogeneity across XBRL filings poses a challenge for individual (non-institutional) investors seeking to make inter-firm comparisons using XBRL data. In order to extend the benefits of XBRL to individual investors, this paper presents a design artifact, Ontology-based Framework for XBRL-mapping and Decision-making (OFXD), which provides interoperability between different XBRL filings. Specifically, OFXD resolves the semantic heterogeneity of the element and context definitions in various XBRL filings and generates an XBRL ontology — XBRLOnt. The results of this study show that the proposed design artifact is capable of addressing semantic heterogeneities between different XBRL filings. Using the concepts of the information value chain, this paper discusses the implications of XBRL interoperability on financial decision-making.