The association between XBRL adoption and market reactions to earnings surprises

Ju Chun Yen, Tawei Wang

Research output: Contribution to journalArticlepeer-review

18 Scopus citations

Abstract

This paper investigates whether the adoption of XBRL is associated with market reactions to earnings surprises around 10-Q and 10-K filing dates based on a sample of XBRL filers in all three phases. Our main findings demonstrate that the adoption of XBRL is positively associated with market reactions to earnings surprises around 10-Q and 10-K filing dates only for Phase II, not for Phase I, filers except when a Phase I filer is followed by fewer analysts. The full-sample test shows that the hypothesized effect also exists for Phase III filers, and we observe an increase in market reaction for Phase II filers after their second year of adoption. We believe this study has policy implications and may alleviate firms’ concerns regarding the benefits of adopting XBRL.

Original languageEnglish
Pages (from-to)51-71
Number of pages21
JournalJournal of Information Systems
Volume29
Issue number3
DOIs
StatePublished - 1 Sep 2015

Keywords

  • Earnings surprises
  • EXtensible Business Reporting Language (XBRL)
  • Mandatory adoption

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