Abstract
ABSTRACTWe investigate the market reaction to legislative events pertaining to the eXtensible Business Reporting Language (XBRL) mandate. The SEC contends that requiring issuers to adopt XBRL for filing their financial statements would reduce information processing costs and improve market efficiency. In contrast, skeptics argue that the mandatory adoption of XBRL would impose substantial costs while providing few, if any, benefits to investors. Using stock returns from countries that did not mandate the adoption of XBRL to model normal U.S. returns, we provide evidence of a positive market reaction to legislative events related to the XBRL mandate. Moreover, we find that the abnormal returns to these events are increasing for firms with less accessible information, higher information asymmetry, greater information processing costs, and lower financial reporting transparency. Overall, our results suggest an expected net benefit to shareholders from the XBRL mandate.JEL Classifications: M41; K22.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
