The Study Of Financial Reporting Standard Of Xbrl: Market Reaction And Standard Diffusion

Since Charles Hoffman, CPA in US, employed XML language into financial reporting in 1998, XBRL standards development has gone through 10 years. XBRL as the future business language will impact the whole financial reporting information chain. In 2008 U.S. Securities and Exchange Commission (SEC) forced listed companies to complete the financial reporting Submitted based on XBRL in the next three years, late countries in the world speed up mandatory disclosure of XBRL financial reporting. Thus XBRL has received attention world widely. China is one of the countries which applied XBRL earliest. Early 2009, Shanghai and Shenzhen stock market launched a XBRL Platform System based on the new CN-GAAP and forced listed companies to publish financial reporting based on XBRL. XBRL has become important research area in accounting.The dissertation focus on the four questions as following: (1) However, does XBRL be recognized by investors in China? Does the financial reporting based on XBRL increase the transparency of company by improving the quality of financial information such as relevance and reliability? (2) The past literatures mostly focus on the XBRL standard itself; however XBRL Taxonomies like GAAP is the linkage among the shareholders and its development and diffusion in the whole information chain is not just a technical matter but the result from compromise of different stakeholders. How do we view development and diffusion of XBRL from social perspective? Which part in society impact on the adoption of XBRL in then information chain? (3) At present XBRL is only forced to be applied into listed companies. Theoretically if XBRL can achieve utility maximization, only it would be adoption by upstream of listed companies. Is there incentive to adopt XBRL by upstream of listed companies? What factors affect on the introduction of XBRL? (4) Although at this stage XBRL financial reporting is just a conversion of traditional financial reporting, XBRL will be fully applied to the whole financial reporting information chain in the end. When listed companies and upstream have motivated to adopt XBRL, XBRL will impact on the information system. How does XBRL improve and impact on the financial information system chain? The four questions above begin from the market reaction of XBRL and study development and diffusion of XBRL as target. They can guide the instruction of XBRL.Based on theory research, empirical study and construction of model, drawing on the experience of supply chain, MIS and idea related to other subjects at the same time, the dissertation does the deeply research on the questions above and gets the following conclutions: (1) Market reaction of quality of financial information is tested after listed companies are forced to submit financial statement based on XBRL.At present, although there is no reaction in the whole market and in Shenzhen Stock market, the disclosure of XBRL financial reporting in Shanghai Stock market impact on earnings response coefficient (ERC) partly. By controlling on the window of event study, it gets the same result. This means that the effect of XBRL has not achieved the desired state although China has forced listed companies to submit financial reporting based on XBRL with the traditional format financial reporting for many years. The main reasons lead to this phenomenon as follow: firstly, the taxonomies should be improved in order to match the demand of disclosure. Secondly If XBRL can fully play its role as expected; it must be applied to the whole financial reporting information chain.(2) The theory of XBRL diffusion.In order to maximize of utility of XBRL, it must be put into the whole information chain. From social perspective, the paper constructs the theory and puts XBRL standard diffusion to the infrastructure perspective and open-source model. From infrastructure perspective, how to embed XBRL into infrastructure are the key characteristics which impact on the diffusion of XBRL. At same time the institutes and personnel related XBRL are the same important to the diffusion such as the interaction between taxonomies and GAAP, taxonomies and Regulator. Because there are many sub-standards in XBRL such as XBRL-FR and XBRL-GL, granularity is the main issues we focus on. Granularity will impact on the diffusion of XBRL. From open-source model, XBRL is open and free. By actor network theory (ANT), the paper analyses motivation of shareholders and market structure to the diffusion of XBRL from three aspects including network externalities, the level of support of participants and the evaluation of the intrinsic value of potential adopters. Now the organizations promote the diffusion and development of XBRL are mainly regulators and XBRL international. If not incenting firms to embed XBRL into information system initiative, the intrinsic value of XBRL cannot fully play.(3) Modeling and Analysis of the diffusion of XBRL.At present XBRL is only forced to be applied into listed companies, however, is there incentive to adopt XBRL by upstream of listed companies? From social perspective, after mandatory adoption of XBRL on the main firm, what are the strategies and equilibrium of stakeholders? By the establishment of game models, the paper gets the result that upstream has the incentive to adopt XBRL as XBRL standard can improve the competitiveness of enterprises by reducing transaction costs, but due to the difference of cost of XBRL introduction and usefulness of accounting information at different time points, it leads the difference in the process of XBRL introduction. Therefore, by reducing the cost of introducing XBRL into information system and increasing utility of information such as perfecting GAAP, especially decreasing asymmetry between firms and investors and achieving standardization of financial information by exploring XBRL taxonomy accelerate the diffusion of XBRL. In the end, the paper summarizes the four factors which impact on the XBRL standard diffusion, including the characteristics of technical standard, the characteristics of adopters, external environment of technical standard diffusion and the incentive of technical standard diffusion.(4) The study of XBRL impact on accounting information system.By impacting on the financial information system chain, XBRL can achieve utility maximization. Well then, how does XBRL impact on the financial information system chain and what characteristics is the financial information systems based on XBRL? In the end, the paper analyses the effect and reconstitution of XBRL standard to accounting information system. By analysis of the key features of business processes, the paper studies three factors in information systems which can impact the quality of the business process, that is the work quality of information systems, the user quality of information systems and the quality of business integration, then analysis the cost of information from four factors, including staff time, the user time of information, infrastructure and capital. In the end, the paper constructs the different pattern of information system, including easy to use and easy to change. XBRL, especially XBRL GL, can realize the different pattern of information system to improve the company's operational efficiency by restriction of expansion of the different elements of information.The main innovation of the paper is including:(1) Although it was tested whether Voluntary Filer Program in SEC improved the transparency and Corporate Governance. There is no empirical analysis for the financial reporting based on XBRL in China which is the first country in the world to force listed companies to submit. It's the first time for the paper to test the effect of the financial reporting based on XBRL to investors after XBRL was compulsorily applied in China capital market. By comparison the earnings response coefficient before and after mandatory disclosure, the paper studies whether XBRL plays its full role at present. (2) The past literatures mostly focus on the XBRL standard itself. However XBRL is not only not just a technical matter but the result from compromise of different stakeholders. The paper puts XBRL standard development and diffusion into the social perspective and constructs the theory of XBRL standard development and diffusion based on infrastructure perspective and open-source model. It analysis the factors of XBRL diffusion. From infrastructure perspective, web tracking and granularity should be focused on mainly, from open-source model, we should considerate the incentive of participants and structure of market. In the end, the paper analysis the factors and pattern of XBRL diffusion at present. Construction of the two theories is the guide of future research on development and diffusion of XBRL.(3) Based on the theories constructed above from social perspective, the paper analysis the strategies and equilibrium of the stakeholders in the financial reporting information chain after listed companies as main firms have been forced to submit financial reporting based on XBRL at this stage. The result guides the application of XBRL in the upstream.(4) The paper analysis the effect of XBRL on information system and the main characteristic of accounting information system based on XBRL. By restricting the expansion of taxonomies to control the adaptability of accounting information system, it's the guide for the people to know the accounting information system based on XBRL.