The Impact of Information Processing Costs on Firm Disclosure Choice: Evidence from the XBRL Mandate

66 Pages Posted: 17 Jan 2019 Last revised: 22 Mar 2019

See all articles by Elizabeth Blankespoor

Elizabeth Blankespoor

University of Washington - Michael G. Foster School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: March 2019

Abstract

This paper examines the effect of market participants’ information processing costs on firms’ disclosure choice. Using the recent eXtensible Business Reporting Language (XBRL) regulation, I find that firms increase their quantitative footnote disclosures upon implementation of XBRL detailed tagging requirements designed to reduce information users’ processing costs. These results hold in a difference-in-difference design using matched non-adopting firms as controls, as well as two additional identification strategies. Examination of the disclosure increase by footnote type suggests that both regulatory and non-regulatory market participants play a role in monitoring firm disclosures. Overall, these findings suggest that the processing costs of market participants can be significant enough to impact firms’ disclosure decisions.

Keywords: information processing costs, disclosure, XBRL

JEL Classification: M41, M48, D83, O33

Suggested Citation

Blankespoor, Elizabeth, The Impact of Information Processing Costs on Firm Disclosure Choice: Evidence from the XBRL Mandate (March 2019). Journal of Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3315561 or http://dx.doi.org/10.2139/ssrn.3315561

Elizabeth Blankespoor (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

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