Initial Evidence on the Market Impact of the iXBRL Adoption

Accounting Horizons Forthcoming

Posted: 9 Jun 2020 Last revised: 23 Nov 2021

See all articles by Xin Luo

Xin Luo

Marquette University

Tawei Wang

DePaul University - Kellstadt Graduate School of Business

Liu Yang

Southeast Missouri State University; University of Miami - Department of Accounting

Xinlei Zhao

University of Toledo - College of Business Administration; University of Kentucky, Gatton College of Business and Economics, Von Allmen School of Accountancy, Students

Yiyang Zhang

Youngstown State University - Lariccia School of Accounting and Finance

Date Written: November 22, 2020

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

Suggested Citation

Luo, Xin and Wang, Tawei (David) and Yang, Liu and Zhao, Xinlei and Zhao, Xinlei and Zhang, Yiyang, Initial Evidence on the Market Impact of the iXBRL Adoption (November 22, 2020). Accounting Horizons Forthcoming, Available at SSRN: https://ssrn.com/abstract=3600458

Xin Luo

Marquette University ( email )

David A. Straz, Jr. Hall
Milwaukee, WI 53233
United States

Tawei (David) Wang

DePaul University - Kellstadt Graduate School of Business ( email )

1 E. Jackson Blvd.
Chicago, IL
United States

Liu Yang

Southeast Missouri State University ( email )

1 University Plaza
Cape Girardeau, MO MO 63701
United States

University of Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
United States

Xinlei Zhao

University of Toledo - College of Business Administration ( email )

2801 W. Bancroft
Toledo, OH 43606
United States

University of Kentucky, Gatton College of Business and Economics, Von Allmen School of Accountancy, Students ( email )

Lexington, KY 40506
United States

Yiyang Zhang (Contact Author)

Youngstown State University - Lariccia School of Accounting and Finance ( email )

United States

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