The Effect of Mandatory XBRL Reporting Across the Financial Information Environment: Evidence in the First Waves of Mandated U.S. Filers

Posted: 17 Jan 2011 Last revised: 21 Jul 2014

See all articles by Joung W. Kim

Joung W. Kim

Nova Southeastern University

Jee-Hae Lim

University of Hawaii, Manoa

Won Gyun No

Rutgers, The State University of New Jersey - Accounting & Information Systems

Date Written: 2012

Abstract

This study examines the effect of mandatory XBRL disclosure across various aspects of the financial information environment. Our findings show an increase in information efficiency, a decrease in event return volatility, and a reduction of change in stock returns volatility for 428 firms (1,536 10-K and 10-Q filings) post-XBRL disclosure. In addition, this study shows that XBRL mitigates information risk in the market, especially when there is increased uncertainty in the information environment. Our results are robust to various alternative specifications and research modifications such as a matched-pair control (326 XBRL versus 326 non-XBRL firms), current stock market condition, potential earnings releases, and corporate governance. This study contributes to the literature by systematically documenting evidence of how mandatory XBRL disclosure decreases information risk and information asymmetry in both general and uncertain information environments. Our evidence could potentially assist the SEC in their effort to expeditiously assess the benefits of XBRL.

Keywords: XBRL (eXtensible Business Reporting Language), interactive data, information risk, information asymmetry, information uncertainty, capital markets

Suggested Citation

Kim, Joung W. and Lim, Jee-Hae and No, Won Gyun, The Effect of Mandatory XBRL Reporting Across the Financial Information Environment: Evidence in the First Waves of Mandated U.S. Filers (2012). Journal of Information Systems, Vol. 26, No. 1, pp. 127-153, Spring 2012. Available at SSRN: https://ssrn.com/abstract=1742029

Joung W. Kim

Nova Southeastern University ( email )

3301 College Avenue
Ft. Lauderdale, FL 33314
954-262-5110 (Phone)
954-262-3974 (Fax)

Jee-Hae Lim (Contact Author)

University of Hawaii, Manoa ( email )

2404 Maile Way
Honolulu, HI Honolulu 96822
United States
(808) 956-8503 (Phone)
(808) 956-9888 (Fax)

HOME PAGE: http://shidler.hawaii.edu/directory/jee-hae-lim/soa

Won Gyun No

Rutgers, The State University of New Jersey - Accounting & Information Systems

1 Washington Park, Room 993
Newark, NJ 07102-3122
United States

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