Executive Team Information System and Financial Reporting Competencies, and Voluntary Adoption of XBRL Reporting

Posted: 15 Jan 2013 Last revised: 2 Jan 2017

See all articles by J. Efrim Boritz

J. Efrim Boritz

University of Waterloo - School of Accounting and Finance

Jap Efendi

University of Texas at Arlington

Jee-Hae Lim

University of Hawaii, Manoa

Date Written: January 15, 2012

Abstract

The issue of determinants of voluntary XBRL adoption has drawn considerable attention from the academic community around the world. In the U.S., the voluntary XBRL adoption process evolved under the SEC-administered XBRL Voluntary Filing Program (VFP). A number of papers have attempted to study firm-specific characteristics of VFP participants. Higher innovativeness and stronger corporate governance have been found to be significant factors associated with voluntary XBRL adoption in the U.S. However, these factors do not explain the managerial interest in participating in the VFP. We extend the literature on voluntary adoption of XBRL by focusing on the characteristics of the executive team to investigate whether they are associated with the voluntary adoption of XBRL technology. Specifically, we evaluate whether executive teams (CEO, CFO, and CIO) with higher financial or information system competencies were more likely to voluntarily adopt XBRL technology by electing to participate in the VFP. We also evaluate whether financial and information system competencies within the executive team affected the quality of the XBRL-tagged filings provided under the VFP. We conjecture that higher competency levels would reduce error rates. We find that higher levels of information systems competencies were positively associated with early adoption of XBRL but, surprisingly, we find that higher levels of financial expertise were negatively associated with early adoption of XBRL. We also find that for participants in the VFP the two areas of expertise are differentially associated with XBRL filing quality. Information systems competency is negatively associated with the excessive use of extension taxonomies, errors and warning in the instance document, and reporting lag, whereas financial expertise is negatively associated with taxonomy errors and warnings. These results can be used as a guide for investigating voluntary adoption of other financial reporting technologies, voluntary XBRL filings in other jurisdictions and other voluntary disclosures such as sustainability reporting and voluntary standardized business reporting in XBRL in jurisdictions where such reporting is not mandatory. They can also be used to investigate antecedents of quality in mandatory filing regimes.

Keywords: voluntary disclosure, Extended Business Reporting Language (XBRL), Information Systems competency, Financial Reporting competency

Suggested Citation

Boritz, Efrim and Efendi, Jap and Lim, Jee-Hae, Executive Team Information System and Financial Reporting Competencies, and Voluntary Adoption of XBRL Reporting (January 15, 2012). Journal of Information Systems, Forthcoming, CAAA Annual Conference 2013, Available at SSRN: https://ssrn.com/abstract=2201014 or http://dx.doi.org/10.2139/ssrn.2201014

Efrim Boritz

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada
519-888-4567 (Phone)
519-888-7562 (Fax)

Jap Efendi

University of Texas at Arlington ( email )

415 S West St Apt no 205
Arlington, TX 76019
United States

Jee-Hae Lim (Contact Author)

University of Hawaii, Manoa ( email )

2404 Maile Way
Honolulu, HI Honolulu 96822
United States
(808) 956-8503 (Phone)
(808) 956-9888 (Fax)

HOME PAGE: http://shidler.hawaii.edu/directory/jee-hae-lim/soa

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