XBRL Implementation Research Articles

Factors Associated with Companies' Choices of XBRL Implementation Strategies: Evidence from the U.S. Market

ABSTRACTThis study investigates factors associated with public companies' choices of eXtensible Business Reporting Language (XBRL) implementation strategies. These strategies include Disclosure Management Solution (DMS) versus Stand-Alone Solution (SAS), and outsourcing versus in-house XBRL implementation. Using survey data provided by the Financial Executive Research Foundation, we find that perceived helpfulness of educational resources and perceived difficulties with companies' reporting review process are positively related to the use of DMS. Concerns about XBRL compliance and perceived difficulties with companies' accounting processes are inversely related to the use of DMS. Moreover, advanced XBRL knowledge and perceived helpfulness of XBRL guidance materials are negatively related to the outsourcing of XBRL implementation. Finally, concerns about XBRL compliance and earnings announcement time lags are positively associated with the outsourcing of XBRL implementation. Our results provide guidance for policymakers in developing XBRL implementation policies and for XBRL service providers in designing XBRL solutions for their clients.JEL Classifications: M41.Data Availability: Contact data sources identified in the paper.

Costs and determinants of XBRL implementation as a standard for financial reporting on capital markets

The purpose of this article is to identify the costs and determinants of implementing XBRL as a standard for financial reporting on capital markets. The results of empirical research as well as statements, reports, consultation papers of supervisors of selected capital markets regarding XBRL were reviewed and the content of the collected sources was analyzed. The use of the XBRL standard as a tool supporting finan- cial reporting can potentially bring a number of benefits, such as speeding up the reporting process and improving the flow of information, increasing the reliability and quality of data transferred, making data analysis easier, faster, more flexible, comprehensive and accurate, and increasing the comparability of financial statements. Implementation of the standard is also associated with specific costs that must be incurred by participants of information exchange. As the analyses and research show, the scale of poten- tial benefits, as well as costs related to the use of XBRL may depend on such factors as the size of the enterprise, the industry in which the enterprise operates, the standard implementation mode, rules for implementation and application of the standard provided by capital market supervisors, the XBRL imple-mentation scenario adopted by the enterprise, the level of development of technological infrastructure, and the education and training base.

Factors associated with security/cybersecurity audit by internal audit function

PurposeThe purpose of the study is to explore the factors associated with the extent of security/cybersecurity audit by the internal audit function (IAF) of the firm. Specifically, the authors focused on whether IAF/CAE (certified audit executive [CAE]) characteristics, board involvement related to governance, role of the audit committee (or equivalent) and the chief risk officer (CRO) and IAF tasked with enterprise risk management (ERM) are associated with the extent to which the firm engages in security/cybersecurity audit.Design/methodology/approachFor analysis, the paper uses responses of 970 CAEs as compiled in the Common Body of Knowledge database (CBOK, 2015) developed by the Institute of Internal Auditors Research Foundation (IIARF).FindingsThe results of the study suggest that the extent of security/cybersecurity audit by IAF is significantly and positively associated with IAF competence related to governance, risk and control. Board support regarding governance is also significant and positive. However, the Audit Committee (AC) or equivalent and the CRO role are not significant across the regions studied. Comprehensive risk assessment done by IAF and IAF quality have a significant and positive effect on security/cybersecurity audit. Unexpectedly, CAEs with security certification and IAFs tasked with ERM do not have a significant effect on security/cybersecurity audit; however, other certifications such as CISA or CPA have a marginal or mixed effect on the extent of security/cybersecurity audit.Originality/valueThis study is the first to describe IAF involvement in security/cybersecurity audit. It provides insights into the specific IAF/CAE characteristics and corporate governance characteristics that can lead IAF to contribute significantly to security/cybersecurity audit. The findings add to the results of prior studies on the IAF involvement in different IT-related aspects such as IT audit and XBRL implementation and on the role of the board and the audit committee (or its equivalent) in ERM and the detection and correction of security breaches.

Perception of Companies on XBRL Reporting: A Factor Analytical Study

XBRL (eXtensible Business Reporting Language) allows companies to communicate their annual financial statements in a standard online format which is user friendly and provide information to all stakeholders. It also allows companies to integrate globally. In India, XBRL implementation is at initial stages. This study analyses the perception of Indian companies about the future of XBRL in India. The results of factor analysis show that XBRL reporting improves the reliability of information, changing the environment and promotes global competition.

A Conceptual Study on Xbrl Implementation in India: Issues and Challenges

A Conceptual Study on Xbrl Implementation in India: Issues and Challenges

Affecting factors on eXtensible Business Reporting Language (XBRL) adoption among public listed companies in Amman stock exchange

Background: Adoption of a novel technology-based reporting language plays a significant role in the way how the financial information of the business is communicated. Recently, eXtensible Business Reporting Language (XBRL), based on eXtensible Mark-up Language (XML) is used as advanced technique for financial reporting and the adoption of XBRL is predicted to improve the access and enhance the communication of financial information which has potential benefits to stakeholder groups including: regulatory authorities, accounting firms, professional bodies, business organizations and other stakeholders. Objective: The study aims to investigate the ability of Jordanian companies to adopt and implement eXtensible Business Reporting Language (XBRL), specifically the study examines the effect of environmental, organizational, and technological factors on extensible business reporting language (XBRL) adoption in Jordan. Methodology: A questionnaire survey conducted among 102 participants was used to investigate the related environmental, organizational, and technological factors on XBRL adoption in Jordan. Results: The findings revealed that there are significant differences played by environmental, organizational, and technological factors on XBRL adoption in Jordan statistically. Conclusion: There are several factors which can facilitate XBRL adoption within companies, the environmental, organizational, and technological factors support the process of XBRL adoption and implementation in the Jordanian listed companies in Amman stock exchange. It is suggested that the listed companies on ASE to voluntary apply XBRL, provide specialized training and seminars to its employees in order to improve the awareness and understanding of various aspects of XBRL.

Can information disclosure technology improve investment efficiency? Empirical evidence from China

We study the impact of adopting a new financial reporting technology, XBRL (eXtensible Business Reporting Language) on firms' investment efficiency in the Chinese market. Our primary finding is that adoption of XBRL is associated with improvement in investment efficiency. Specifically, XBRL implementation significantly curbs both under- and over-investment for all listed Chinese firms and the impact on over-investment is six to nine times larger than that on under-investment. This negative association of XBRL adoption and investment inefficiencies is robust after controlling for firms' financial constraints as well as whether a firm is SOE (state-owned-enterprise), both of which affect a firm's availability of capital and thus investment efficiency.

XBRL Implementation in the Banking Sector in Montenegro

Abstract The EXtensible Business Reporting Language – XBRL appeared in the beginning of the 21st century and it represents one of the most important technological innovations in financial reporting, collecting and exchanging data since the introduction of electronic spreadsheets. However, although the XBRL standard is globally accepted, and it has been proved to be a standard sui generis, the implementation of the standard has not yet become a reality in Montenegro and the region. In this context, the goal of this article is to evaluate a new and, for our conditions unexplored, area from the point of application of modern methods of accounting theory and practice, highlighting both positive and negative aspects. This research is getting prominence having in mind that the EU integration process which Montenegro has already started would affect all areas of socioeconomic life and development, especially in terms of accounting practices harmonization.

Factors associated with internal audit function involvement with XBRL implementation in public companies: An international study

We examine the relationships of national legal system, company size, and corporate governance quality with internal audit function (IAF) involvement with eXtensible Business Reporting Language (XBRL) implementation in public companies. Our data source is The Institute of Internal Auditors' Global Internal Audit Common Body of Knowledge (CBOK) database, from which we extract responses from 692 chief audit executives (CAEs) for our investigation. We find evidence of differential effects of company size on IAF involvement with XBRL implementation, depending on the national legal system. In civil law countries, IAFs of small companies have significantly higher levels of XBRL involvement than do IAFs of large companies, whereas, in common law countries, IAFs of large companies have higher levels of involvement than do those of small companies. Finally, we find evidence that corporate governance quality is positively associated with IAF involvement with XBRL implementation.

The effect of mandatory XBRL and IFRS adoption on audit fees

Purpose – The purpose of this paper is to evaluate the impact of the International Financial Reporting Standards (IFRS) and eXtensible Business Reporting Language (XBRL) on audit fees based on evidence from listed companies operating in an emerging economy. Whilst IFRS constitute high-quality accounting standards, XBRL represents a technology standard that can enhance the usability of IFRS and overall financial reporting transparency. Design/methodology/approach – Multivariate analyses are used on a sample of 1,798 firm-year observations between 2000 and 2011 from companies listed in the Shanghai Stock Exchange that were subject to XBRL and IFRS adoption mandates. Findings – The main results suggest that XBRL has a main negative effect on audit fees which is weaker for larger firms. Additionally, the authors find that IFRS increases audit fees for all companies. Whilst this effect is positive for firms of different sizes, it is weaker for larger firms. Research limitations/implications – Whilst the findings are applicable to the selected sample and may or may not be generaliseable to other economies, they can provide important implications for both regulators and companies that are undertaking IFRS convergence and XBRL implementation projects in developing economies around the world. Originality/value – This study offers a timely assessment of the economic consequences of IFRS and XBRL on listed companies operating in an emerging economy, in addition to providing an important basis upon which further research can be designed in order to extend the analysis.

Does XBRL disclosure management solution influence earnings release efficiency and earnings management?

PurposeThis study aims to investigate whether eXtensible Business Reporting Language (XBRL) disclosure management solution improves public companies’ earnings release efficiency and mitigates earnings management.Design/methodology/approachThis study adopts a unique survey data set from the Financial Executives Research Foundation 2013 to identify companies’ XBRL implementation strategies. Earnings release efficiency is measured by earnings announcement time lag. Multiple indicators of both accruals- and real activities-based earnings management are adopted to examine the research hypotheses.FindingsThe authors find that the disclosure management solution (DMS) XBRL implementation is positively associated with earnings release efficiency for companies with good news. The authors also find that DMS implementation strategy is negatively related to accruals-based earnings management, but positively related to real activities-based earnings management measured by abnormal cash flows.Research limitations/implicationsThe results of this study can inform regulators, investors and corporate management on how XBRL adoption is associated with corporate financial reporting.Originality/valueThe study contributes to the XBRL literature by providing empirical evidence on how the strategies adopted by companies to implement XBRL may affect the results of XBRL mandatory adoption.

A Field Study Examining the Indian Ministry of Corporate Affairs' XBRL Implementation

ABSTRACTThe eXtensible Business Reporting Language (XBRL) represents an electronic reporting standard that has gained global prominence. Yet, almost all XBRL academic research has focused on the Securities and Exchange Commission's mandate with little attention to international regulator XBRL mandates and how the consequent implementations have directly impacted the accounting profession. Accordingly, our field study describes India's Ministry of Corporate Affairs' (MCA) XBRL implementation. The MCA scenario is unique, because it is the first mandatory XBRL implementation that also requires accountant certification, thus increasing the demands placed on accountants. We first report the MCA's underlying motivations and summarize their perceived benefits. Next, we examine the taxonomy and relevant documentation, investigate a sample of 15 filings, and conduct semi-structured interviews with certifying accountants of the 15 filings. Our analysis shows 219 errors post-certification, 190 from company secretaries, which can be classified into four categories and nine subcategories. Additionally, results indicate confusion with regard to XBRL validation, architectural flaws in the taxonomy and a consequent lack of taxonomy understanding, no additional procedures undertaken when certifying accountants detect errors, and a lack of incentive to provide quality certification. In light of the extant literature, we suggest the MCA change its focus from document-level certification to data-level assurance. Our findings serve to advance the evolving XBRL assurance research.Data Availability: Data used are proprietary.

XBRL Implementation and Post-Earnings-Announcement Drift: The Impact of State Ownership in China

ABSTRACTIn this paper, we test the impact of XBRL (eXtensible Business Reporting Language) on information asymmetry in the emerging market of China. We focus on the association between XBRL and information asymmetry (proxied by Post-Earnings-Announcement Drift [PEAD]) across two ownership structures: state-owned enterprises (SOEs), which are dominant in China, and non-state-owned enterprises (non-SOEs). We find that information asymmetry diminishes significantly, as reflected by a significant decline in PEAD, after the mandatory adoption of XBRL, and it diminishes more significantly in SOEs than non-SOEs. Our results remain robust after we control for market and accounting factors that may influence PEAD. Our paper not only supports XBRL's role in improving the market efficiency of the emerging market, but also first documents the impact of government ownership on the implementation of XBRL.

Examining the Adoption of Extensible Business Reporting Language among Public Listed Companies in Malaysia

Abstract This study examines the adoption of an accounting information systems language known as Extensible Business Reporting Language (XBRL) among public listed companies in Malaysia. Using 100 top public listed companies as the sample study, this study examines whether these companies have adopted XBRL, consistent with the call made by the Companies Commission of Malaysia (CCM) for such adoption. Such call was made to encourage listed public companies to provide their annual reports via XBRL and ultimately improves harmonisation between companies and between countries. The result of this study shows that to this date, no public listed companies have adopted XBRL. Such scenario indicates that there could be issues and challenges that have deter the implementation of XBRL among these companies. The result in this study serves as a starting point for CCM and other Malaysian regulators to consider the issues and challenges as to why such scenario exists and subsequently, provide strategies to encourage these companies to adopt XBRL.

XBRL Implementation and Post-Earnings-Announcement Drift: The Impact of Ownership Structure in China

In this paper, we test the impact of XBRL (eXtensible Business Reporting Language) on information asymmetry in the emerging market of China. We focus on the association between XBRL and information asymmetry (proxied by Post-Earnings-Announcement Drift, PEAD) across two ownership structures: state-owned enterprises (SOEs), which are dominant in China, and non-state-owned enterprises (non-SOEs). We find that information asymmetry diminishes significantly, as reflected by a significant decline in PEAD, after the mandatory adoption of XBRL, and it diminishes more significantly in SOEs than non-SOEs. Our results remain robust after we control for market and accounting factors that may influence PEAD. Our paper not only supports XBRL’s role in improving the market efficiency of the emerging market, but also first documents the impact of government ownership on the implementation of XBRL.

XBRL to enhance external financial reporting: Should we implement or not? Case Company X

The growing use of eXtensible Business Reporting Language (XBRL) represents a fundamental change for financial information flows. In a number of countries XBRL has already been put to practical use, for instance through implementation within the financial processes of non-listed companies. This fictional case is designed to help identify the benefits of XBRL. In addition, it helps to create knowledge about the different strategies of XBRL implementation and to apply this knowledge when making investment decisions on accounting information processes.

Can Information Disclosure Technology Improve Investment Efficiency? Empirical Evidence from China

We study the impact of adopting a new financial reporting technology, XBRL (eXtensible Business Reporting Language) on firms’ investment efficiency in the Chinese market. Our primary finding is that adoption of XBRL is associated with improvement in investment efficiency. Specifically, XBRL implementation significantly curbs both under-and over-investment for all listed Chinese firms and the impact on over-investment is 6 to 9 times larger than that on under-investment. This negative association of XBRL adoption and investment inefficiencies is robust conditional on firms’ financial constraints as well as whether a firm is SOE (state-owned-enterprise), both of which affect a firm’s availability of capital and thus investment efficiency.

XBRL Taxonomy Design: Empirical Evidence from IFRS and U.S. GAAP Filers

Research Question/Issue: In the last twenty years a technological revolution occurred fueled by the widespread diffusion of the internet. With regard to Financial Reporting, this trend also generated the development of Extensible Business Reporting Language (XBRL), which many accounting experts expect to revolutionize financial reporting since it allows corporate financial information to be aggregated, transmitted and analyzed quicker and more accurately (Bovee, Srivastava, & Mak, 2003). Current theory about taxonomy implementation assumes that the extension rate of IFRS-filers in comparison to U.S. GAAP-filers is much higher and therefore the objectives of standardization, comparability and reusability of the information that is sought with the XBRL framework is limited for the IFRS XBRL implementation (Bonson, Cortijo, & Escobar, 2009). The Security Exchange Commission (SEC) has expressed similar concerns due to design difference, as the IFRS Taxonomy compared to U.S. GAAP only provides a reduced number of tags or elements so that the likelihood of companies creating extensions, or custom tags, in their XBRL submissions is much higher for IFRS than U.S. GAAP (Whitehouse, 2012). The research question is if these design difference can be confirmed based on empirical data for IFRS-filers in comparison to existing research findings on U.S. GAAP. Research Findings/Insights: The main research finding is that although the number of total elements within the U.S. GAAP taxonomy compared to the IFRS taxonomy is three times higher looking at empirical data it becomes obvious that this only represent a theoretical design difference and is misleading as in practice only a small portion of the U.S. GAAP taxonomy is really applied for XBRL taggings by corporations. Considering IFRS-filers, although the availability of data is limited, the average number of elements tagged and the average extension rate compared to U.S. GAAP considering factors such as industry, size and type of disclosures is similar. Methodology: An inductive quantitative method using public available IFRS XBRL filings is applied. For U.S. GAAP-filers available findings from XBRL studies are considered. To evaluate the impact of XBRL submission, this paper applies -- where indicated -- capital market theory and the concept of information efficiency. Theoretical/Academic implication: The study is based on the assumption that IFRS taxonomy extension rate is much higher than under U.S. GAAP. Practitioner/Policy implication: The study provides insights into XBRL for IFRS-filers listed on the NYSE and is relevant for practitioner, taxonomy developer as well as for the academic researcher.

XBRL and the Future of Electronic Business Reporting in Nigeria

The idea of electronic Standard Business Reporting (SBR) has achieved remarkable heights in developed economies over the last decade. With the development of XBRL in 1998 by Charlie Hoffman and subsequent introduction of the first SBR projects in the Netherlands and Australia less than ten years after, an important question therefore arises: what level of similar advancement has been achieved in emerging economies and what are the possible implications for the future of financial reporting in these countries. To analyze this topic, Nigeria has been chosen as a reference point. To enhance objectivity, an empirical approach was engaged through a structured survey directed at professional accountants in the Big Four accounting firms with offshore offices located in the country. This information was sought in order to assess the future of electronic Business Reporting in Nigeria in line with the global trend of harmonizing the accounting profession. Results show that respondents share the view that XBRL implementation would improve the Nation's Corporate Governance process. Although there exist over 50 XBRL projects in 15 Economies in Europe and over 10,000 voluntary filers in Northern America, respondents are of the view that substantial adoption of XBRL in Nigeria is likely to be influenced by mandatory requirement. This outcome suggest that there should be reform patterns of behaviour of market agents and regulatory agencies to encourage the adoption of XBRL Taxonomy interactive data, so as to provide the channel for the most adequate mechanism of electronic Business Reporting that would assist the Nation's capital market reach its desired global marketplace for developmental purposes.

Critical reflection on XBRL: A “customisable standard” for financial reporting?

In this paper, we discuss the dual power of XBRL to standardise and/or accommodate firms’ financial reporting practices. We first develop a conceptual framework for understanding which factors may affect the adoption of XBRL and, in turn, standardise or customise financial reporting. We then examine the XBRL implementation models adopted in two countries: Italy and the US. In Italy, XBRL is required through the application of a standard taxonomy (the Italian GAAP Taxonomy), without the ability to create and submit taxonomy extensions. Conversely, in the US, XBRL is required through the application of a standard taxonomy (the US GAAP Taxonomy), along with the ability to define individual extensions to be submitted to the SEC. We discuss the potential effects of taxonomy application on the representation of financial information. The application of a taxonomy on a “blind basis” (extensions not permitted) leads not only to the full comparability of financial data but also to a loss of idiosyncratic information. The application of a taxonomy on a “minimum basis” (individual extensions permitted) preserves specific information, but causes a potential loss of data comparability.