XBRL Adoption and the Demand for Financial Statements

• In Event: Research Paper Session—Auditing and AIS

Abstract

Since the mandatory adoption of XBRL for financial statements, a number of studies have examined its economic consequences using indirect measures of investor behavior. Our study contributes to this literature by directly examining the impact of XBRL adoption on investor requests for financial statements. Our results show that requests increase after the adoption of XBRL, and that this increase is not driven by demand for financial statements in older, alternative formats. Cross-sectional results show that firms with lower visibility receive a greater number of requests and that requests from users with superior resources and abilities increases more subsequent to XBRL adoption. These findings suggest that the XBRL mandate may be a double-edged sword. On the one hand, XBRL adoption is associated with greater requests for financial statements. However, our evidence also suggests that the XBRL mandate may widen the information gap between sophisticated and unsophisticated investors.

Author

• Jie Zhou, National University of Singapore