Joint Meeting of the Mid-Atlantic and Northeast Regions

Improving Accessibility and Comparability of Financial Reporting Using XBRL—A Comparison of the U.S. to China

• In Event: Accounting and Technology

Abstract

XBRL is an open-source language and a new tool to improve the comparability of financial reporting. We examined whether, and to what extent, XBRL and iXBRL achieved a better result than IFRS in the comparability of financial reporting in the US and China. Our study utilized a targeted review of the literature to identify the similarities and differences in financial reporting.
Our review of the selected articles concluded mixed results of XBRL influences on financial reporting for the two countries. The results suggested XBRL improved accessibility and comparability of quality financial information, as evidenced by positive impacts on investment decision-making and the decrease in the cost of equity capital in both the US and China. However, differences still remained relating to organization characteristics, and earnings management. We believe this may be due to macroeconomic and organizational level differences between the two countries.

Our paper contributes to the XBRL and the emerging iXBRL literature. Our study sheds light on future research by providing broader implications for international studies by comparing the two largest economies, China and the US. We believe our findings will remind regulators and standard setters, as they attempt to align domestic standards with the global ones, of the relevance of country-level differences. Our study may open new topics for future research, considering EU regulated countries will soon make iXBRL reporting mandatory. Also, future research can explore whether the XBRL application can enhance corporate ESG disclosures.

Authors

• Roberta J Cable, Pace University

• Chunyan Li, Pace University

• Jessica Shen, Pace University