HCBE Faculty Articles

Title

Can XBRL Detailed Tagging of Footnotes Improve Financial Analysts' Information Environment?

Document Type

Article

Date

3-2018

Publication Title

International Journal of Accounting Information Systems

ISSN or ISBN

1467-0895

Volume

28

First Page

45

Last Page

58

Description

In 2010 the SEC began requiring registeredfirms to provide detail-tagged footnote information inXBRL (eXtensible Business Reporting Language). As expected, the number of total tags soared dueto this requirement. This study investigates whetherfinancial analysts' information environmentimproved after this rule went into effect. It is possible that having footnote information detail-tagged reduces the cost to process footnote information. Ourfindings show that analysts' forecasterror and dispersion for the next quarter earnings estimates decreased after the SEC requirementwent into effect. We alsofind that the number of analysts followingfirms increased after man-datory detailed tagging was adopted. This is consistent with the notion that detailed tagging offootnote information reducesfinancial analysts' information processing costs. However, whenfirms use customized (as opposed to standardized) footnote tags, forecast error and dispersion areless likely to decrease. This suggests that regulators may need to limitfirms' ability to use cus-tomized tags. Last, our results suggest that the benefits of detail-tagged footnotes increases overtime as analysts become more comfortable with the information

DOI

10.1016/j.accinf.2017.12.003

Peer Reviewed

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