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The impact of mandatory adoption of XBRL on firm’s stock liquidity: a cross-country study

Wafa Sassi (Higher Institute of Accountancy and Business Administration, University of Manouba , Manouba, Tunisia)
Hakim Ben Othman ( American University of Malta , Bormla, Malta)
Khaled Hussainey (Department of Accounting and Financial Management, Portsmouth Business School, Portsmouth University , Portsmouth, UK)

Journal of Financial Reporting and Accounting

ISSN: 1985-2517

Article publication date: 22 January 2021

Issue publication date: 28 May 2021

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Abstract

Purpose

The purpose of this paper is to examine the impact of the mandatory adoption of eXtensible Business Reporting Language (XBRL) on firm’s stock liquidity.

Design/methodology/approach

Using a random-effects model, this study examines the impact of the mandatory adoption of XBRL (ADOPXBRL) on firm’s stock liquidity of 980 companies pertaining to 13 countries for a period from 2000 to 2016.

Findings

This paper finds that the mandatory ADOPXBRL affects negatively and significatively Amihud’s (2002) illiquidity ratio. Therefore, mandatory XBRL adoption enhances the firm’s stock liquidity. In addition, this paper finds that the impact of the mandatory ADOPXBRL on firm’s stock liquidity is more pronounced in civil law countries than in common law countries.

Originality/value

This paper contributes to the literature on the advantage of XBRL especially for the civil law countries by examining the impact of the mandatory ADOPXBRL on firm’s stock liquidity.

Keywords

Citation

Sassi, W., Ben Othman, H. and Hussainey, K. (2021), "The impact of mandatory adoption of XBRL on firm’s stock liquidity: a cross-country study", Journal of Financial Reporting and Accounting, Vol. 19 No. 2, pp. 299-324. https://doi.org/10.1108/JFRA-07-2020-0207

Publisher

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Emerald Publishing Limited

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