Effect Of XBRL Adoption Research Articles

The effect of XBRL adoption on information symmetry in companies’ financial reports through knowledge management: Perceptions of employees of the Jordan securities commission

The aim of this study is to investigate the impact of XBRL adoption on information symmetry in the presence of knowledge management as a mediating variable. Data were collected using a questionnaire distributed to all employees working at the Jordan Securities Commission (JSC). Applying the partial least squares method via SmartPLS-3, the results pointed out that the XBRL had significant positive direct effects on knowledge management and information symmetry, knowledge management had a significant positive direct effect on information symmetry. Hence, a partially mediating significant effect of knowledge management was detected between the XBRL and information symmetry. Accordingly, the study recommended governmental legislative bodies to continue supporting XBRL adoption to improve the quality of financial information. The study also recommends understanding the perceptions of preparers and users of financial statements about challenges that hinder the adoption of XBRL in various commercial sectors in order to improve the consistency of informational content in annual reports.

The benefits of structured data across the information supply chain: Initial evidence on XBRL adoption and loan contracting of private firms

A growing body of literature documents how different parties benefit from structured data across the information supply chain. The purpose of this study is to examine the effect of voluntary adoption of the eXtensible Business Reporting Language (XBRL) on price and non-price terms of loan contracting. Using a sample of Belgian private firms, the analyses provide evidence that banks charge lower interest rate spreads to voluntary adopters as compared to non-adopters. The results also show that loan sizes are larger in comparison for voluntary adopters of XBRL. Further, the effect of XBRL adoption is stronger for opaque firms. The results are robust to using different estimation approaches as well as additional tests. The findings are in line with the view that XBRL data filings reduce information processing costs, and contribute to our understanding of the impact of structured data on loan contracting – an implication that may be of interest to regulators and other parties interested in the benefits of structured data across the information supply chain.

The Effect of XBRL Adoption on Trading Behaviors of Foreign Investors: Evidence from Korea

This study tests a hypothesis that if information access to foreign investors expands after the adoption of eXtensible Business Reporting Language (XBRL) and the associated information is incorporated into their trading behaviors, then their trading turnover ratio would significantly increase. As expected, I find that the trading turnover ratio of foreign investors significantly increases after XBRL adoption compared to before XBRL adoption. Furthermore, this study examines the difference in foreign investors’ trading behavior between small and large firms. I find that the increase in the foreign investor’s turnover ratio in small firms is more pronounced and economically significant than that of large firms. Overall, this study presents evidence that XBRL adoption affects the trading behaviors of foreign investors.

How XBRL Affects the Cost of Equity Capital? Evidence from Emerging Market

This study, by using a natural link engine-XBRL, examines the direct and indirect linkages between financial reporting quality (FRQ) and cost of equity capital (CEC) and checks how XBRL affects CEC from the perspective of intracompany environment, represented by corporate governance, dominant shareholders identity and firm age, the characteristics of which can further substantiate the direct and indirect linkages between FRQ and CEC. Using a one-group pre- and post-test design and Path Analysis, we predict and find that XBRL reduces CEC and contribute to higher strength of direct linkage between FRQ and CEC by improving FRQ, compared to the strength of indirect linkage that is mediated by information asymmetry (IA) by decreasing IA. This result is verified when we choose intracompany environment to check how XBRL affects CEC. Findings show that high levels of corporate governance indicating good financial reporting quality (FRQ), state-owned enterprises (SOEs) and younger firms indicating high information asymmetry can be observed more reduction in the effect of XBRL adoption on CEC.

Does XBRL Adoption Reduce the Cost of Equity Capital?

XBRL filing reduces investors` information processing cost. We find that XBRL adoption results in a significant reduction in firms` cost of equity capital and that this effect is stronger in firms with small size, high growth, low analyst coverage and illiquid stocks. We also show that firms experience an increase in analyst coverage, forecast accuracy and a decrease in forecast dispersion after XBRL adoption. Further, XBRL adoption improves firms` stock liquidity. Finally, the effect of XBRL adoption on the cost of equity capital, analyst behavior and stock liquidity is weaker for voluntary filers than for mandatory filers. In sum, we provide strong evidence supporting the argument that information processing cost significantly affects the cost of equity capital.