Releasing Information in XBRL: Does it Improve Information Asymmetry for Early U.S. Adopters?

• In Event: Short Paper Presentations

Abstract

The Securities and Exchange Commission (SEC) require all publicly traded companies to file their reports with the Commission in the XBRL format. Information released in XBRL is intended to improve the quality and accessibility of the reported information, leading to less information asymmetry in the equity market. In this study we examine changes in two measures of information asymmetry for early adopters of XBRL in the U.S. Specifically, we find that bid-ask spreads are significantly reduced when information is filed using XBRL; yet, we find no overall change in trading volume associated with XBRL filings for early adopters. However, when examining the larger early adopting firms we find evidence of reduced information asymmetry (bid-ask spreads are significantly reduced and trading volume is significantly increased). Our results generally support the SEC requirement of XBRL formatted financial information on the grounds that it may improve information asymmetry of large filers in the U.S. equity market.

Authors

• Marshall A Geiger, University of Richmond

• David A North, University of Richmond

• Daniel D. Selby, University of Richmond