Information released in XBRL is intended to improve the quality and accessibility of SEC filings, leading to less information asymmetry in the equity market. Research findings on the effects of XBRL on information asymmetry in the US., however, are mixed. Kim et al. (2012) reports that XBRL reduces information asymmetry while Blankespoor et al. (2012) reports that XBRL increases information asymmetry. In contrast to these prior studies, we report that the answer as to whether XBRL affects information asymmetry is matter of firm size. In this study we examine shifts in two measures of information asymmetry for early adopters of XBRL in the US. Specifically, we find that the bid-ask spreads of early XBRL adopters significantly decrease after they adopt XBRL; yet, we find no overall change in trading volume associated with XBRL filings for early adopters. However, when examining the larger early adopting firms, we find evidence of reduced information asymmetry (bid-ask spreads significantly decrease and trading volume significantly increase). Our results generally support the SEC requirement of XBRL formatted financial information on the grounds that it may reduce information asymmetry of large filers in the US. equity market.
Copyright © 2014 Allied Academies. This article first appeared in Academy of Accounting and Financial Studies Journal 18, no. 4 (2014): 66-83.
Please note that downloads of the article are for private/personal use only.
Geiger, Marshall A., David S. North, and Daniel D. Selby. "Releasing Information in XBRL: Does It Improve Information Asymmetry for Early U.S. Adopters?" Academy of Accounting and Financial Studies Journal 18, no. 4 (2014): 66-83.