Leveling the Playing Field between Large and Small Institutions: Evidence from the SEC's XBRL Mandate

Posted: 20 Nov 2017

See all articles by Neil Bhattacharya

Neil Bhattacharya

Singapore Management University - School of Accountancy; Southern Methodist University (SMU) - Accounting Department

Young Jun Cho

Singapore Management University - School of Accountancy

Jae B. Kim

Lehigh University - College of Business & Economics

Date Written: October 2017

Abstract

We investigate how XBRL adoption affects smaller institutions’ access to financial statement information relative to their larger counterparts. We examine three aspects of trading responsiveness: abnormal trading volume, response speed to 10-K information, and decision to trade immediately following the 10-K filing. With regard to all three aspects of trading responsiveness, we find that small institutions’ responsiveness to 10-K news increases significantly more relative to the change experienced by large institutions from the pre- to post-XBRL periods. We further document that small institutions’ stock picking skills in the 10-K filing period increase more compared to those of large institutions following the regulation. Our results are robust to a battery of falsification and sensitivity tests. Collectively, our results suggest that the informational playing field between small and large institutions has become more even following the SEC’s XBRL mandate.

Keywords: XBRL, Analysts, Institutions, Information Asymmetry

JEL Classification: G11, G24, M48

Suggested Citation

Bhattacharya, Neil and Cho, Young Jun and Kim, Jae Bum, Leveling the Playing Field between Large and Small Institutions: Evidence from the SEC's XBRL Mandate (October 2017). The Accounting Review, Forthcoming ; SMU Cox School of Business Research Paper No. 18-1. Available at SSRN: https://ssrn.com/abstract=3072332

Neil Bhattacharya (Contact Author)

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

Southern Methodist University (SMU) - Accounting Department ( email )

United States
214-768-3082 (Phone)
214-768-4099 (Fax)

HOME PAGE: http://www.cox.smu.edu

Young Jun Cho

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore, 178900
Singapore

Jae Bum Kim

Lehigh University - College of Business & Economics

621 Taylor Street
Bethlehem, PA 18015
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
755
PlumX Metrics