A family member of "XML" languages, it is becoming a standard means of communicating information between businesses and of sharing data online.
Introduction Live stats of Internet users show clearly that the Internet has increased in its use over de last two decades, and it still does. Users are defined as individuals who have access to the Internet at home, these stats do not say anything about the frequency of use.
Inonly 0. Bermuda is relatively the most penetrated country, Absolutely, this means that there are over three billion Internet users around the globe Internet Live Stats, Due to this increase in its accessibility, the Internet can now be called a widespread medium.
This medium has the benefit over traditional mediums such as newspapers that it has international reach, whereas newspapers may only reach a local audience. This medium may therefore be used as a communication device of financial information to a widespread and international audience.
The act of communicating financial information over the Internet is referred to with terms as Corporate Internet Reporting and Internet Financial Reporting.
These problems involve resource discovery, attribute recognition and standards. It is thought of as a way to solve some of the challenges mentioned before. XBRL is among others expected to increase comparability, efficiency and decrease the information gap between user groups.
Those are widespread notions but Debreceny and Gray even state in their conclusion that reporting mechanisms such as XBRL may improve the value of financial reporting for stakeholders, whereas Yoon states that stock prices may increase due to XBRL-filings. Such findings suggest XBRL may have a significant impact on how reporting is done and the effect it might have.
These filings are supplements to the regulatory paper-filings. The phase-in of XBRL means that in the first filing, only financial statement line items have to be tagged and notes only as blocks.
The year after that, also notes should be extensively tagged. The purpose of this study is to evaluate how the information set provided by financial reporting is being influenced by the use XBRL. This research is interesting since all prior research focusses on the overall benefits, not necessarily on the effect it has on the information set that??
Findings may help XBRL in being accepted in two ways. First, investors may be motivated to make use of XBRL-filings since high quality information may affect the efficiency of decision-making. Studies such as those of Debreceny and Gray and Yoon suggest that there is a relation between the way reporting is done and firm value and thus stock prices.
If a relation between those is in place, this must mean the investment decision is being influenced by the information provided through XBRL-filings. End-user acceptance is necessary for the successful implementation of a system.
Second, if information quality tends to increase due to the use of XBRL for financial reporting purposes, this might cause more efficient decision making which may cause firm value to increase. This study therefor focusses on the question: How is the quality of the information set provided by financial reporting being influenced by XBRL?
This question is being answered by the use of a literature review of scientific articles. The remainder of this paper is organised as follows. Section 2 contains the theoretical framework necessary to understand the research, financial reporting as well as how the Internet has changed this, developments such as Internet Financial Reporting and XBRL are being introduced in this part.
Section 3 discusses how comparability, information asymmetry and reliability are being influenced by the use of XBRL. In Section 4 limitations to this research are discussed. Finally, Section 5 provides a conclusion of this research in which the question asked is being answered.
Background To be able to research the question provided in the introduction, it is necessary to understand some definitions and mechanisms.
This chapter provides a brief overview of what financial reporting is and how the Internet has changed how financial reporting is being done. The objective of general purpose financial statements is to provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions.
The financial report includes the statement of the financial position, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows as well as notes to the financial statements and possibly other regulatory additions.
Financial statements are the key part of the financial report since these tend to address the objective from IAS 1, they provide information about the firms??
The need for financial reporting arises from the separation of ownership and control. Ownership is with the capital providers, from the agency theory point of view these are seen as principal. Control is with the management of the corporation, management is responsible for the value creation by means of the capital provided.
Managers are typically seen as agents by agency theorists. Owners should be able to control management through investment choices which demand information.
This indicates the need for financial reporting, it makes efficient decision making possible. Efficient assumes no information asymmetry exists, both the principal as the agent have the same information available.Companies can use XBRL to save costs and streamline their processes for collecting and reporting financial information.
Consumers of financial data, including investors, analysts, financial institutions and regulators, can receive, find, compare and analyse data much more rapidly and efficiently if it is in XBRL format. XBRL stands for eXtensible Business Reporting Language.
Put simply, it is a standard that was developed to improve how financial data is communicated. A family member of "XML" languages, it is becoming a standard means of communicating information between businesses and of sharing data online.
In fact, XBRL reduces information asymmetry between corporations and investors (Kim et al., ), and further allows analysts to obtain more time for value added analysis, not only through their ability to summarize and distribute information to investors but also through their ability to effectively process the provided information results in.
information including companies, investors, analysts, regulators and government reporting entities. XBRL is relevant to any organisation or individual that either produces or uses. XBRL creates interactive data that can be used by investors through the use of “tags.” Each “tag” stores semantic information about its associated number or disclosure .
stated, “The first rule is that when it comes to communicating financial information to investors, analysts, and the media, public companies can’t be transparent enough. Every piece of data.