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Article
Publication date: 29 November 2018

Indrit Troshani, Joanne Locke and Nick Rowbottom

Corporate reporting infrastructure and communication are being transformed by the emergence of digital technologies. A key element of the digital accounting infrastructure…

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Abstract

Purpose

Corporate reporting infrastructure and communication are being transformed by the emergence of digital technologies. A key element of the digital accounting infrastructure underpinning international corporate reporting is the IFRS Taxonomy, a digital representation of international accounting standards that is required by firms to produce digital corporate reports. The purpose of this paper is to trace the development, governance and adoption of the IFRS Taxonomy to highlight the implications for accounting practice and standard-setting.

Design/methodology/approach

The authors mobilise Actor Network Theory and a model of transnational standardisation to analyse the process surrounding the formation and diffusion of the IFRS Taxonomy as a legitimate “reference” of the IFRS Standards. The authors trace the process using interview, observation and documentary evidence.

Findings

The analysis shows that while the taxonomy enables IFRS-based reporting in the digital age, tensions and detours result in the need for a realignment of the perspectives of both accounting standard-setters and taxonomy developers that have transformative implications for accounting practice and standard-setting.

Originality/value

The study explains how and why existing accounting standards are transformed by technology inscriptions with reflexive effects on the formation and diffusion of accounting standards. In doing so, the paper highlights the implications that arise as accounting practice adapts to the digitalisation of corporate reporting.

Details

Accounting, Auditing & Accountability Journal, vol. 32 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 22 March 2022

Denis Cormier, Pierre Teller and Dominique Dufour

The study investigates the relevance for stock markets of voluntary disclosure of eXtensible Business Reporting Language (XBRL) extensions [based on International…

Abstract

Purpose

The study investigates the relevance for stock markets of voluntary disclosure of eXtensible Business Reporting Language (XBRL) extensions [based on International Financial Reporting Standards (IFRS) or US-GAAP] for an international sample of US cross-listed firms.

Design/methodology/approach

The study examines if the disclosure of XBRL extensions by a firm provides relevant information to market participants. Towards that end, this paper investigates whether this type of disclosure affects the level of information asymmetry between insiders and investors and if it is value relevant. This study measures information asymmetry by bid-ask spread and value relevance by stock price or Tobin's Q.

Findings

After a certain level of disclosure of XBRL extensions, the impact on stock pricing is negative (creates noise on stock markets). Controlling for that phenomenon, both IFRS and US-GAAP XBRL extensions are value relevant. Second, results indicate that XBRL extensions are positively (negatively) related to stock market value for firms that exhibit positive (negative) earnings. This suggests a complementary effect between earnings and XBRL extensions on their relation with stock price or Tobin's Q. Finally, the results also indicate that both IFRS extensions and US-GAAP extensions are associated with lower information asymmetry (i.e. bid-ask spread).

Originality/value

To the best of the authors’ knowledge, this study is the first to investigate the relevance of XBRL extensions under IFRS for US cross-listed firms since the availability of the IFRS taxonomy for foreign private issuers that prepare financial statements under IFRS standards.

Details

Managerial Finance, vol. 48 no. 5
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 7 May 2019

Thomas Zeller, John Kostolansky and Michail Bozoudis

This study aims to identify a taxonomy of financial ratios derived from financial statements prepared using International Financial Reporting Standards (IFRS). The work…

Abstract

Purpose

This study aims to identify a taxonomy of financial ratios derived from financial statements prepared using International Financial Reporting Standards (IFRS). The work first empirically establishes and then statistically validates the taxonomy of financial attributes captured in financial ratios. In 2005, the European Commission required that publicly traded companies in the European Union use IFRS as the basis for financial reporting. In the same year, Australia adopted IFRS as a basis for financial reporting. Since then, 120 countries and reporting jurisdictions have adopted IFRS as the basis for financial reporting. Given that IFRS predominate in the financial reporting world, it seems essential to establish and validate IFRS-based ratio attributes. Only then can reliance upon and comparability of these ratios be warranted (Altman and Eisenbeis, 1978). Using principle component analysis, the authors empirically identify nine stable attributes (factors) for ratios drawn from IFRS-based financial statements from 84 counties. The findings provides an empirical basis to formulate testable hypotheses regarding the predictive and descriptive utility of financial ratios draw from IFRS-based financial statements.

Design/methodology/approach

The paper begins with a broad category of IFRS-based financial ratios, 50, found in practice and research, including income statement, balance sheet, cash flow, profitability and liquidity measures. Then, a sample of companies from the manufacturing sector is segmented using IFRS as a basis of financial statement reporting. Next, principal component analysis, a method of factor analysis, is applied to empirically identify factors and financial attributes captured in financial ratios used in research inquiry and financial analysis.

Findings

The authors find that the financial attributes captured by IFRS-based ratios go well beyond the traditional measures of profitability, liquidity and solvency. The authors identify nine factors that are interpretable and stable over the period, 2011-2015: asset relationship, asset turnover, capital structure, expense insight, fixed asset usage, inventory turnover, liquidity, profitability margin and performance return. Interestingly, the authors did not find a separate cash flow factor. Most importantly, the results corroborate that IFRS-based ratios are consistent and comparable, despite innate country differences that have been shown to influence the application, interpretation and use of IFRS.

Research limitations/implications

The efforts are limited to the manufacturing sector. The financial attributes may be different in service, distribution and retail sectors. Also, limiting the effort are the ratios selected in this study. A broader range of ratios may widen the identification of unique stable factors over time.

Practical implications

The findings provide a basis for research and analysis efforts regarding the validity, comparability and stability of IFRS-based financial ratios. Most importantly, the results corroborate that IFRS-based ratios are consistent and comparable, despite innate country differences that have been shown to influence the application, interpretation and use of IFRS. The findings should be of interest to international and national financial reporting standard setters, investors and analysts.

Originality/value

An empirically evidenced classification system for IFRS-based financial ratios has yet to be determined based on a financial statements across a wide breadth of countries and reporting jurisdictions. Identification of stable interpretable factors, financial attributes, has been limited. The first is that inquiry has been limited to domestic-based, such as US Generally Accepted Accounting Principles, financial ratios. The second is inquiry has been limited to IFRS-based financial ratios within a specific country.

Details

Accounting Research Journal, vol. 32 no. 1
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 1 April 2008

P.W. Buys

In recent times there have been major developments in the areas of digitising business information, which can impact the financial reporting supply chain. Such…

Abstract

In recent times there have been major developments in the areas of digitising business information, which can impact the financial reporting supply chain. Such developments include the eXtensible Business Reporting Language (XBRL) technology. The South African regulator of financial services and a major South African retirement fund administrator were recently the first South African organisations to embark on an XBRL proof of concept initiative as part of an attempt to enhance their financial reporting supply chain, from initial data recording, to the submission of the reports, to the analysis of the data. This paper provides highlights of this initiative against the background of current XBRL developments, the financial reporting supply chain and the digitising efforts of such supply chains.

Article
Publication date: 12 June 2020

Yuan George Shan and Indrit Troshani

The study improves current understanding concerning the implications of digital corporate reporting technology on the informativeness of accounting information.

Abstract

Purpose

The study improves current understanding concerning the implications of digital corporate reporting technology on the informativeness of accounting information.

Design/methodology/approach

It looks at how XBRL, an exemplar digital corporate financial reporting technology, affects value relevance of accounting information in the US and Japan, two key jurisdictions where XBRL has been mandated. We operationalise stock price and return value relevance models to assess and compare predicted associations between selected accounting measures and market value of equity in these countries.

Findings

We predict that the selected accounting measures are more value relevant after XBRL was mandated than before. We find evidence to support our prediction for the US sample. We also predict and find that the contribution of XBRL to the value relevance of the selected accounting measures is greater in the US than in Japan. Overall, our evidence provides support that digital corporate reporting technology enhances relevance and reliability of accounting measures.

Originality/value

The study appears to be the first to have examined the impact of XBRL on value relevance whilst comparing between two major jurisdictions. The study extends emerging but limited literature concerning the benefits of digital corporate financial reporting for enhancing the communication between firms and users of financial information. The findings are useful to both users of financial information and standard setters.

Details

International Journal of Managerial Finance, vol. 17 no. 2
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 18 September 2018

Joanne Locke, Nick Rowbottom and Indrit Troshani

The purpose of this paper is to analyse the process by which “analogue” corporate reports produced under a “paper paradigm” are translated into a machine language as…

Abstract

Purpose

The purpose of this paper is to analyse the process by which “analogue” corporate reports produced under a “paper paradigm” are translated into a machine language as required by digital reporting. The paper uses Austin and Searle’s linguistic speech act theory to examine how digitally translating reporting information into atomised data affects the infrastructure and practice of accounting.

Design/methodology/approach

Extensive interview and observation evidence focussed on the IFRS Foundation’s digital reporting project is analysed. An interpretive approach is informed by the concepts of L compatibility, illocution and perlocutionary acts which are drawn from speech act theory.

Findings

Two key sites of translation are identified. The first site concerns the translation of accounting standards, principles and practices into taxonomies for digital tagging. Controversies arise over the definition of accounting concepts in a site populated by accounting and IT-orientated experts. The second site of translation is in the routine production and dissemination of digital reports which impacts the L compatibility between preparers and users.

Originality/value

The paper highlights a previously unexplored field of translation in accounting and contributes a unique perspective that demonstrates that machine translation is no longer marginalised but is the “primary” text with effects on the infrastructure and practice of accounting. It extends speech act theory by applying it to the digital domain and in the context of translation between languages.

Details

Accounting, Auditing & Accountability Journal, vol. 31 no. 7
Type: Research Article
ISSN: 0951-3574

Keywords

Book part
Publication date: 23 August 2021

Mohammad Nurunnabi

The purpose of this study is to review a synthesis of International Financial Reporting Standards (IFRS) implementation in developing countries in an attempt to provide…

Abstract

The purpose of this study is to review a synthesis of International Financial Reporting Standards (IFRS) implementation in developing countries in an attempt to provide directions for future research. The in-depth analysis was performed with the use of the data analysis tool available in the Scopus databases. The study initially reviewed 145 papers and in particular 35 papers were analysed. Fifteen articles (43%) were published in seven journals including International Journal of Accounting, Critical Perspectives on Accounting, Advances in Accounting, International Journal of Accounting and Information Management, Asian Review of Accounting, Journal of Applied Accounting Research, and Asian Journal of Business and Accounting. Specifically, 89% citations were from 14 articles, but 9 (25%) articles were without any citations. Most of the studies focus on qualitative followed by quantitative, and very few studies were based on mixed methods. Researchers should focus on few areas for future research on IFRS implementation in developing countries including theory implications, policy prescriptions, and case of particular standard.

Details

International Financial Reporting Standards Implementation: A Global Experience
Type: Book
ISBN: 978-1-80117-440-4

Keywords

Article
Publication date: 12 March 2018

Matteo La Torre, Diego Valentinetti, John Dumay and Michele Antonio Rea

The purpose of this paper is to examine the potential for eXtensible Business Reporting Language (XBRL) to go beyond static reporting. A taxonomy structure of information…

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Abstract

Purpose

The purpose of this paper is to examine the potential for eXtensible Business Reporting Language (XBRL) to go beyond static reporting. A taxonomy structure of information is developed for providing a knowledge base and insights for an XBRL taxonomy for integrated reporting (IR).

Design/methodology/approach

Design Science (DS) research, as a pragmatic exploratory research approach, is embraced to create a new “artefact” and thematic content analysis is used to analyse IR in practice.

Findings

Using XBRL for IR allows a shift from static and periodic reporting to more relevant and dynamic corporate disclosure for stakeholders, who can navigate and retrieve customised disclosure information according to their interest by exploiting the multidimensionality of IR and overcome some of its criticisms. The bi-dimensional taxonomy structure the authors’ present allows users to navigate disclosure from two different perspectives (content elements (CE) and capitals), display specific themes of interest, and drill down to more detailed information. Because of its evidence-based nature and levels of disaggregation, it provides flexibility to preparers and users of information. Additionally, the findings demonstrate the need to codify sector-specific information for the CE, so that to direct the efforts toward the development of sector-specific taxonomy extensions in developing an XBRL taxonomy for IR.

Research limitations/implications

The limitations of DS research are, first, the artefact design and, second, its effects in practice. The first limitation stems from the social actors’ perspective taken into account to develop the taxonomy structure, which derives from the analysis of the reporting practices rather than a pluralistic approach and dialogic engagement. The second limitation relates to the XBRL taxonomy development process because, since the study is limited to the “design” phase being codification and structuring the knowledge base for an XBRL taxonomy, there is a need to develop a taxonomy in XBRL and then apply it in practice to empirically demonstrate the potential and benefits of XBRL in the IR context.

Practical implications

The taxonomy structure is targeted at entities interested in designing an XBRL taxonomy for IR. This is a call for academics and practitioners to explore the potential of technology to improve corporate disclosure and open up new projections for resurging themes on intellectual capital (IC) reporting with prospects for IC “fourth-stage” research focused on IC disclosure.

Originality/value

This is an interdisciplinary research employing the DS approach, which is rooted in information systems research. It is the first academic study providing pragmatic results for using XBRL in the context of IC and IR.

Details

Journal of Intellectual Capital, vol. 19 no. 2
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 29 January 2020

Rania Mousa and Robert Pinsker

The purpose of this paper is to examine the implementation and development of eXtensible Business Reporting Language (XBRL) at the Federal Deposit Insurance Corporation…

Abstract

Purpose

The purpose of this paper is to examine the implementation and development of eXtensible Business Reporting Language (XBRL) at the Federal Deposit Insurance Corporation (FDIC). The investigation seeks to gauge the roles and experiences of the FDIC and its main stakeholders to determine their engagement in XBRL diffusion within their organizations.

Design/methodology/approach

This is an qualitative research approach that is driven by the use of an in-depth case study and supported by the use of semi-structured interviews.

Findings

The findings showcase the role played by the FDIC as the first US regulatory authority that implemented and developed Inline XBRL. In addition, the use of diffusion of innovation theory provides better understanding of each stakeholder’s issues, benefits and challenges based on their experience.

Research limitations/implications

The research does not examine the institutionalization of XBRL at the FDIC or its stakeholders. Therefore, future research could incorporate a different research design to capture the impact of the pressure resulting from the regulatory mandate.

Practical implications

The research offers practical insights into public information technology managers and policymakers at global government agencies which are either non-adopters of XBRL technology or current adopters and consider transitioning into Inline XBRL. Global stakeholders could learn from the US experience and develop better understanding of Inline XBRL applications and functionalities.

Originality/value

The originality of this research is driven by the FDIC’s experience as the first regulatory developer of Inline XBRL. As such, the case study is a best practice to future and current adopters who often navigate the nuisance of implementing new technologies and/or developing existing ones.

Details

Qualitative Research in Accounting & Management, vol. 17 no. 2
Type: Research Article
ISSN: 1176-6093

Keywords

Article
Publication date: 3 May 2011

Carolyn J. Cordery, Carolyn J. Fowler and Khairil Mustafa

The purpose of this paper is to explore the factors influencing the non‐adoption of Extensible Business Reporting Language (XBRL) technology.

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Abstract

Purpose

The purpose of this paper is to explore the factors influencing the non‐adoption of Extensible Business Reporting Language (XBRL) technology.

Design/methodology/approach

This exploratory study analyses interview data obtained from key XBRL stakeholders on the relative importance of environmental, organisational and technological context factors to ascertain why adoption has not occurred.

Findings

The research finds three reasons for XBRL non‐adoption. First, the lack of a government “push” for XBRL technology results in organisational ignorance. Second, it appears that organisations do not believe that XBRL will beneficially reduce compliance costs. Third, complexity in developing the structured language (taxonomy) for XBRL use has significant budgetary implications.

Research limitations/implications

As qualitative research, this study does not claim to be generalisable or objective. However, the rich data were analysed from a diverse group of interviewees experienced and knowledgeable in respect of XBRL development and adoption.

Social implications

Governments' promises to reduce organisational compliance costs may be a reason for them to invest extensive taxpayers' dollars into XBRL. However, organisations are sceptical they will benefit, requiring government to “push” the technology. Until government servants can forecast the real benefits to argue for increased budgets to develop a comprehensive taxonomy, widespread adoption of XBRL is unlikely to occur.

Originality/value

The non‐adoption of XBRL highlights the difficulties encountered when enthusiastic professionals can see the potential of a business solution, and yet are impotent to execute it. Environmental and technological contextual factors need to “push” organisations, as with XBRL, organisations do not demand, or “pull”, the technology.

Details

Pacific Accounting Review, vol. 23 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

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