XBRL Adoption and Bank Loan Contracting : Early Evidence

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

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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)47–69
Journal / PublicationJournal of Information Systems
Volume32
Issue number2
Online publishedFeb 2017
Publication statusPublished - Jul 2018
Externally publishedYes

Abstract

We examine how the adoption of the eXtensible Business Reporting Language (XBRL) for financial reporting impacts the pricing of bank loans. Using a sample of loans granted to U.S. borrowers from 2007-2013, we find that the adoption of XBRL is associated with a reduction in loan spreads. We further find that the reduction in loan spreads is greater for borrowers who have information that is inherently costlier to process. Results from a difference-in-differences specification along with other alternative research designs provide similar inferences. Subsequent to XBRL adoption, we further show that loan spreads are lower for firms who use more standardized XBRL tags and greater for those who use more extension elements. Overall, our results are consistent with the view that the XBRL mandate brings about an environment that enables lenders to gather and process information in a timelier manner and at a lower cost.

Research Area(s)

  • eXtensible Business Reporting Language (XBRL), information technology, information processing cost, loan contracting

Bibliographic Note

Month information for this publication is provided by the author(s) concerned.

Citation Format(s)

XBRL Adoption and Bank Loan Contracting : Early Evidence. / Chen, Gary; Kim, Jeong-Bon; Lim, Jee-Hae; Zhou, Jie.

In: Journal of Information Systems, Vol. 32, No. 2, 07.2018, p. 47–69.

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