XBRL Implementation by Internal Audit Functions: An International Study of Public Companies

• In Event: XBRL and Financial Reporting

Abstract

This study examines the effects of national legal system and company size on internal audit functions’ (IAFs’) involvement with eXtensible Business Reporting Language (XBRL) implementation in public companies across various countries. Using data from 692 chief audit executives (CAEs), we hypothesize and find evidence that IAFs in small public companies are more involved with XBRL implementation than those in large companies. More interestingly, we hypothesize and find an interaction effect for legal systems and company size on IAFs’ involvement with XBRL implementation processes. Specifically, we find that IAFs of small companies in common law countries have significantly lower levels of XBRL involvement than those in civil law countries, while IAFs in large companies in common law countries have higher levels of involvement than civil law countries. Among control variables, we find that companies with female CAEs and those with an accounting major report more IAF involvement with XBRL implementation than those with male CAEs and those with majors other than accounting. None of the other control variables (IAF age, CAE education [graduate versus undergraduate], CAE certification, and CAE continuing professional education) is significant in our Logit model.

Authors

• Mohammad J Abdolmohammadi, Bentley University

• Steven DeSimone, Bentley University

• Tien-Shih Hsieh, University of Massachusetts Dartmouth

• Zhihong Wang, Clark University