Does XBRL help improve data processing efficiency?

• DOI: https://doi.org/10.1108/IJAIM-07-2021-0155
• Published date: 29 October 2021
• Date: 29 October 2021
• Pages: 47-60
• Subject Matter: Accounting & finance,Accounting/accountancy,Accounting methods/systems
• Author: Yanchao Rao,Ken Huijin Guo

Does XBRL help improve data

processing efficiency?

Yanchao Rao

School of Accountancy, Shanghai University of Finance and Economics,

Shanghai, China, and

Ken Huijin Guo

College of Business and Economics, California State University,

Fullerton, Fullerton, California, USA

Abstract

Purpose –The US Securities andExchange Commission (SEC) requires public companiesto file structured

data in eXtensible Business Reporting Language (XBRL). One of the key arguments behind the XBRL

mandate is that the technical standard can help improve processing efficiency for data aggregators. This

paper aims to empiricallytest the data processing efficiency hypothesis.

Design/methodology/approach –To test the data processingefficiency hypothesis, the authors adopt a

two-sample research design by using data from Compustat: a pooled sample (N=61,898) and a quasi-

experimental sample (N=564). The authors measure data processingefficiency as the time lag between the

dates of 10-K filings on the SEC’s EDGAR system and the dates of related datafinalized in the Compustat

database.

Findings –The statisticalresults show that after controllingfor potential effects of firm size, age, fiscal year

and industry, XBRL has a non-significant impact on data efficiency. It suggests that the data processing

efficiencybenefit may have been overestimated.

Originality/value –This study provides some timely empirical evidence to the debate as to whether

XBRL can improvedata processing efficiency. The non-significantresults suggest that it may be necessary to

revisitthe mandate of XBRL reporting in the USA and many other countries.

Keywords XBRL, Data aggregation, Data processing efficiency

Paper type Research paper

1. Introduction

The eXtensible Business Reporting Language (XBRL) as a financial reporting technical

standard has been adopted by morethan 50 countries around the world [1]. In the USA, the

Securities and Exchange Commission (SEC) started its XBRL reporting initiative around

2004 as a voluntary program and has since 2009 mandated public companies to use it in

their corporate disclosuressuch as annual reports (10-K). The adoption of XBRLis expected

to benefit companies, investors and government agencies in terms of data processing and

information dissemination (SEC, 2004;SEC, 2009). Overall, the accounting and finance

literature has reported mixed findings about the expected benefits of the XBRL standard

(Perdana et al.,2015,2019).

One particular benefit cited by the SEC is the expected improvement of processing

efficiency by data aggregators (SEC, 2009).However, beyond the conjectures and comments

that the SEC relied upon, therehas been surprisingly little empirical evidence to support that

Data Availability: Data is obtained from public sources identified in the paper.

Data

processing

efficiency

47

Received28 July 2021

Revised29 September 2021

Accepted12 October 2021

InternationalJournal of

Accounting& Information

Management

Vol.30 No. 1, 2022

pp. 47-60

© Emerald Publishing Limited

1834-7649

DOI 10.1108/IJAIM-07-2021-0155

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