Timeliness of 10-K Filings and the Usability of Interactive Data under the SEC’s XBRL Mandate

• In Event: Interactive Technology

Abstract

We investigate how the SEC’s XBRL mandate has affected the timeliness of 10-K filings. Since a primary goal of the XBRL mandate is to promote standardization in financial reporting, we also examine the extent of use of extension tags over predefined taxonomy tags as a measure of usability of the interactive data filings. We select three industry sectors for our investigation: companies in the software services sector that should presumably be most adept at implementing XBRL, those in the highly regulated financial services sector that have a history of complying with regulatory filing requirements, and those in relatively low technology industries such as agriculture and dairy products that are less likely to be familiar with XBRL or have extensive regulatory filing requirements. We also investigate the extent to which the timeliness of filings and the usability of filings are related to the software vendor used for the XBRL filing. We retrieve and analyze all XBRL filings at the SEC web site for the years 2009 to 2013 for public companies in the high-tech software services industry, in the regulated commercial banking industry, and companies in the low-tech sector (e.g., agricultural products, textiles, dairy products). The primary variables analyzed across the three industry sectors and across software vendor types are the timeliness of filing and the percentage of the total tags that are standard (US GAAP) tags. Based on an analysis of 798 firm-year observations for the years 2009 to 2013, we find no significant change in filing timeliness in the first year of the XBRL filing but a significant decrease in filing delay (more timely filings) beyond the initial filing year. Results also reveal that the prevalence of the use of extension tags increased in XBRL filings beyond the initial filing year. Certain software vendors were associated with a greater prevalence of the use of extension tags. Overall, we find that the XBRL mandate has resulted in more timely filings, but the use of custom tags persists.

Authors

• Uday S Murthy, University of South Florida

• Neal Michael Snow, University of South Florida