The Impact of XBRL Adoption on theInformation Environment: Evidence from Japan

Abstract

This article investigates whether and how the Japanese Financial Services Agency's mandatory use of XBRL affects investors in assessing financial information. Although regulators expect the introduction of XBRL to enhance the transparency and quality of business reporting, given the non-trivial implementation and learning costs, whether the XBRL-based disclosure reduces the information asymmetry between sophisticated and less-sophisticated investors remains an empirical question. As prior studies in other countries employing mandatory XBRL adoption provide mixed results, our analysis of the Japanese case should be somewhat insightful because Japan is one of the few countries where thousands of listed firms were forced to use the XBRL format all at once. By examining various measures in the pre-and post-XBRL periods, we provide evidence consistent with the notion that the adoption of XBRL has helped to improve the information environment, as indicated by the reduction of event returns volatility, absolute cumulative abnormal returns, changes in the standard deviation of returns, and the abnormal bid-ask spread.

Earnings Management in the Pre and Post eXtensible Business Reporting Language Period in Indonesia

“…Hodge et al (2004) and Pinsker & Wheeler (2009) found that investors who use existing technology well, such as XBRL, are better to interpret the information contained in financial statements than investors who do not use the technology. The previous studies found that XBRL adoption increases the transparency of firm financial statements (Bai et al, 2014;Kim et al, 2019;Kim et al, 2012;Pinsker & Li, 2008;Wang & Seng, 2014;Yen & Wang, 2015;Yoon et al, 2011).…”

The Impact of Adoption of The XBRL on the Development of Stock Markets

“…Many empirical studies examined the role of the adoption of XBRL for shareholders (Premuroso & Bhattacharya, 2008;Tan & Shon, 2009;Yoon, Zo, & Ciganek, 2011;Kim, Lim, & No, 2012;Peng, Shon, & Tan, 2011;Bai, Sakaue, & Takeda, 2014;Hao, Zhang, & Fang, 2014;Kim, Li, & Liu, 2014;Tan & Shon, 2009;Shan & Troshani, 2014;Felo, Kim, & Lim, 2018;Blankespoor, 2019). For example, Yoon et al (2011) found that XBRL adoption improves the searching capability of investors and reduces information asymmetry.…”

“…Although some studies demonstrated that the adoption of the XBRL is very beneficial and has positive consequences (Hodge, Kennedy, & Maines, 2004;Tan & Shon, 2009;Yoon, Zo, & Ciganek, 2011;Chen, 2012;Bai, Sakaue, & Takeda, 2014;Markelevich, Shaw, & Weihs, 2015;Tzu-Yi et al, 2016;Blankespoor, 2019;Kumar, Kumar, & Dilip, 2019;Rahwani et al, 2019), there is still a need to examine the its usefulness at the country level (Nobre & Carvalho, 2011;Steenkamp & Nel, 2012). For example, Cong, Hao, and Zou (2014) provided empirical evidence that XBRL adoption improves stock market efficiency.…”

“…Other studies found mixed empirical results regarding the potential benefits of XBRL adoption. For example, although several studies found that the adoption of XBRL decreases information asymmetry, increases analysts' forecast accuracy, reduces the cost of capital, and improves firms' stock liquidity (Bai, Sakaue, & Takeda, 2014;Hao, Zhang, & Fang, 2014;Liu, Wang, & Yao, 2014;Liu, Luo, & Wang, 2017;Felo, Kim, & Lim, 2018"ISSN" : "14670895", "abstract" : "In 2010 the SEC began requiring registered firms to provide detail-tagged footnote information in XBRL (eXtensible Business Reporting Language; Ra & Lee, 2018) other studies found the opposite findings (Blankespoor, Miller, & White, 2014;Liu, Luo, et al, 2014;.…”

The determinants factors of accounting practitioner’s attitude towards the use of Malaysian Business Reporting System (MBRS)

“…According to the XBRL International, on 2018 [1] about 8 million filers submit their filing using Extensible Business Reporting Language (XBRL) format to business registrars in 20 countries such as United State, Korea, China and Singapore. The unique tagging structure in XBRL has become the main reason this countries encouraged filing submission in XBRL format to make sure that the submitted reporting transaction are accurate, reliable, efficient in process and to promote new paperless environment [2][3] [4] [5].…”