Does XBRL disclosure management solution influence earnings release efficiency and earnings management?

Document Type

Article

Abstract

Purpose: This study aims to investigate whether eXtensible Business Reporting Language (XBRL) disclosure management solution improves public companies’ earnings release efficiency and mitigates earnings management. Design/methodology/approach: This study adopts a unique survey data set from the Financial Executives Research Foundation 2013 to identify companies’ XBRL implementation strategies. Earnings release efficiency is measured by earnings announcement time lag. Multiple indicators of both accruals- and real activities-based earnings management are adopted to examine the research hypotheses. Findings: The authors find that the disclosure management solution (DMS) XBRL implementation is positively associated with earnings release efficiency for companies with good news. The authors also find that DMS implementation strategy is negatively related to accruals-based earnings management, but positively related to real activities-based earnings management measured by abnormal cash flows. Research limitations/implications: The results of this study can inform regulators, investors and corporate management on how XBRL adoption is associated with corporate financial reporting. Originality/value: The study contributes to the XBRL literature by providing empirical evidence on how the strategies adopted by companies to implement XBRL may affect the results of XBRL mandatory adoption.

Publication Title

International Journal of Accounting and Information Management

Publication Date

2019

Volume

27

Issue

1

First Page

74

Last Page

95

ISSN

1834-7649

DOI

10.1108/IJAIM-06-2017-0079

Keywords

accruals-based earnings management, disclosure management solution, earnings release time lag, real activities-based earnings management, XBRL

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