Does Information-Processing Cost Affect Firm-Specific Information Acquisition? Evidence from XBRL Adoption

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

31 Scopus Citations
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Author(s)

  • Yi Dong
  • Oliver Zhen Li
  • Yupeng Lin
  • Chenkai Ni

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)435-462
Journal / PublicationJournal of Financial and Quantitative Analysis
Volume51
Issue number2
Publication statusPublished - 1 Apr 2016

Abstract

We examine how information-processing cost affects investors' acquisition of firm-specific information using a natural experiment resulting from a recent mandate requiring U.S. firms to adopt eXtensible Business Reporting Language (XBRL) when submitting filings to the U.S. Securities and Exchange Commission (SEC). XBRL filings make financial data standardized, tagged, and machine readable. We find that XBRL adoption reduces firms' stock return synchronicity. The reduction in synchronicity mainly applies to filings under the mandatory program as opposed to the voluntary program. Furthermore, such an effect is more pronounced for opaque and complex firms. Finally, we find that XBRL adoption also reduces price delay.