Determinants of eXtensible business reporting language adoption: an institutional perspective

Published date30 March 2022
Date30 March 2022
Subject MatterAccounting & finance,Accounting/accountancy,Accounting methods/systems
AuthorHela Borgi,Vincent Tawiah
Determinants of eXtensible
business reporting language
adoption: an institutional
Hela Borgi
Department of Accounting/College of Business and Administration,
Princess Nourah bint Abdulrahman University, Riyadh, Saudi Arabia, and
Vincent Tawiah
DCU Business School, Dublin City University, Dublin, Ireland
Purpose This paper aims to examine the institutionalfactors that inf‌luence the adoption of eXtensible
BusinessReporting Language (XBRL) at the country level.
Design/methodology/approach The authors use a large sample of 175 developed and developing
countries over14 years. Data is obtained from different sourcesincluding, World Development Indicators, the
Reportson the Observance of Standards and Codes (ROSC) website and the Quality of Governmentdatabase.
Findings The results highlight the signif‌icanceof coercive, mimetic and normative pressuresin terms of
ROSC reports, theextent of accounting globalisation and education. However,in further analyses, the authors
found that coercive pressure is pronounced in developing countries. Nevertheless, mimetic pressure is an
important,inf‌luential factor for all countries regardlessof their status as developed or developing.
Originality/value This study responds to the lack of researchon the country-level factors of countries
adoption of XBRL. The present study contributes to the literature by providing additional evidence on the
country-level factorsinf‌luencing XBRL adoption. Using the institutional theory, the authors provide a better
understanding of the global diffusion of XBRL, which has attracted little attention. The study also
complementsprior literature on the adoption of internationalaccounting and f‌inancial reportingpractices.
Keywords XBRL, Financial reporting, Institutional theory, Accounting system
Paper type Research paper
1. Introduction
The eXtensible Business Reporting Language (XBRL) is an open standard for preparing,
communicating, exchanging and analysing business information over the internet (Alkhatib
et al., 2019;Eierle et al., 2014). XBRL enables f‌irms to f‌ile one set of information instead of f‌iling
it repeatedly in different forms to professional organisations and government agencies for
many purposes (Sinnett and Willis, 2009). Many regulators and professional organisations
have recognised the XBRL as a standardised format for electronic f‌inancial reporting with
more benef‌its in the creation, preparation, exchange, analysis and communication of business
information than other reporting formats (e.g. Word, Excel, PDF, XTML).
Adopting XBRL technology in the f‌inancial reporting process signals better disclosure
and lower information asymmetry (Kim et al.,2012). This leads to a reduction in the cost of
capital, increased f‌irm value (Premurosand Bhattacharya, 2008) and an improved business-
to-government reportingprocess (Liu et al.,2017). These benef‌its are essential in the context
Received30 November 2021
Revised7 February 2022
Accepted28 February 2022
InternationalJournal of
Accounting& Information
Vol.30 No. 3, 2022
pp. 352-371
© Emerald Publishing Limited
DOI 10.1108/IJAIM-11-2021-0242
The current issue and full text archive of this journal is available on Emerald Insight at:
of dealing with problems related to transparency and accountability of f‌inancial reporting.
Globally, regulatorsare using XBRL to improve the transparency of capital for investors [1].
Despite these acclaimed benef‌its, little is known about factors driving countries to adopt
XBRL (Perri and Allko, 2015;Steenkamp and Nel, 2012;Sassi et al., 2021). Some scholars
have called for comparative analysis of XBRL adoption in different countries (Bartolacci
et al., 2021). Hence, the essential thrustof this paper is to investigate factors inf‌luencing the
adoption of XBRL in both developedand developing countries.
Following prior studieson the dynamics of adopting international standards (Judgeet al.,
2010;Hassan et al.,2014;Boolakyand Soobaroyen, 2017;Boolaky et al.,2020),we draw from
the institutional theory to explain the determinantsof XBRL. According to the institutional
perspective, countries are conceptualised as social actors that seek to gain or maintaintheir
legitimacy, and as such, they are subject to international and national forces. These forces
bring about a wide array of pressures that shift nation-states towards the adoption of
similar practices (i.e. isomorphism) within a determined institutionalised environment of
global norms, customs and rules of governance (Alon and Dwyer, 2014;Chua and Taylor,
2008;Hopper et al.,2017). DiMaggio and Powell (1983) classif‌ied these forces as coercive,
mimetic and normative. These institutional factors (i.e. forces) could play a key role in
adopting world-accepted models such as XBRL (Touron, 2005;Judge et al.,2010), and it is
essential for the regulators and researchers to have a better understanding of these
inf‌luences. Ramanna and Sletten (2014) arguethat the adoption of new accounting systems
in f‌irms is associated with a countrys internal politics, e.g. ideology-driven policymakers
and special interest groups. Other research also notices the lack of knowledge of XBRL in
several countries (Perri and Allko, 2015;Steenkamp and Nel, 2012;Sassi et al., 2021). More
recently, Bartolacci et al. (2021) called for research on comparative analysis of XBRL
adoption in differentcountries. They suggest that it could provide a better understanding of
how regulators use XBRL in different contextsand why some countries have opted to make
it mandatory. Therefore, studyingthe determinants of countriesadoption of new standards
contributes to an improvedunderstanding of the adoption process.
We used a large sample of 175 developed and developing countries between 2005 and
2018. Our sample size and period yielded a minimum of 1,452 observations in the regression
estimations. Data is obtained from different sources, including World Development
Indicators, the World Bank website, International Financial Reporting Standards (IFRS)
Foundation, International Federation of Accountants (IFAC) membership prof‌ile and
Quality of Government database. These different sources are widely used in accounting
studies (Borgi and Mnif, 2022;Kaya and Koch,2015;Sellami and Borgi, 2020;Boolaky et al.,
2020), as they provide a consistentand reliable database available to all stakeholders.Using
different sourcesis also necessary for the robustness of results.
Our results highlight the signif‌icance of coercive, mimetic and normative pressures in
terms of Reports on the Observance of Standards and Codes (ROSC) reports, the extent of
accounting globalisation and education, respectively. However, in further analyses, we
found that coercive pressureis pronounced in developing countries. The mimetic pressure is
an inf‌luential factorfor all countries regardless of their status as developed or developing.
By using the institutional framework to explain XBRL adoption at a country level, this
study extends the generalisability and applicability of the institutional framework. From a
practical perspective, our f‌indings create more awareness of XBRL, a signif‌icant
contribution, given that lack of awareness has been identif‌ied as a major hindrance to the
use of XBRL (Cordery et al.,2011).Organisations such as XBRL International, the American
Institute of Certif‌ied Public Accountants (AICPA) and the Institute of Management
of eXtensible

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