Initial Evidence on the Market Impact of the iXBRL Adoption

Abstract

On June 2018, the SEC adopted Inline eXtensible Business Reporting Language (iXBRL), which embeds XBRL data to HTML-formatted annual reports, to improve the accessibility and usefulness of information disclosures to investors. This study assesses the effectiveness of iXBRL by examining its impact on informational efficiency and information asymmetry. Using a sample including iXBRL voluntary adopters before 2019, we find that iXBRL adoption lowers stock return drift and facilitates information being impounded into firm stock prices following the filing of annual reports. We also find that unlike XBRL, iXBRL reduces information asymmetry in the long run. Our results are robust to a difference-in-differences analysis based on the Phase I iXBRL mandate in 2019. Further investigation reveals that iXBRL attracts more unsophisticated individual investors to access firms’ annual reports than XBRL. These findings are consistent with the SEC’s intention of adopting iXBRL to combine human-readable and machine-readable information. Our study provides initial evidence on the effectiveness of iXBRL in communicating information to external users of annual reports.

Keywords: Inline XBRL, Informational Efficiency, Price Discovery