Investor Demand for Financial Statements and XBRL Adoption

• In Event: XBRL and Auditing

Abstract

Since its adoption in 2009, there have been concerns about investor use of XBRL. We take a first step in addressing this concern by examining whether the adoption of XBRL led to greater investor acquisition of financial statements. We provide evidence that requests for financial statements through EDGAR significantly increased subsequent to the XBRL mandate. Moreover, we find that the increased demand is primarily driven by downloads of XBRL-formatted financial statements as opposed to older, alternative formats. Further analyses show that the increase in search is more pronounced for firms with lower visibility, and is greater for users with superior resources and abilities as measured through faster internet connection speeds and identified as coming from states with greater educational attainment. Our findings suggest that the XBRL mandate may be a double-edged sword. On the one hand, we find that XBRL adoption is associated with greater information acquisition through financial statements. However, evidence also suggests that it may widen the information gap between sophisticated and unsophisticated investors.

Authors

• Jie Zhou, National University of Singapore

• Gary Chen, University of Illinois-Chicago