Can XBRL Improve the Decision Processes and Decision Quality of Novices’ Financial Analysis?

Abstract

The increasing availability of eXtensible Business Reporting Language (XBRL) financial statements motivates additional investigation of whether XBRL’s search-facilitating technology (SFT) and enhanced viewing capabilities facilitate information search and improve financial analysis decision quality and efficiency. This experiment investigates how using XBRL technology to view financial statements influences novice investors’ decision quality by affecting decision processes such as search strategy and effort, as well as decision efficiency (accuracy/effort) in a financial statement analysis task. In the experiment, randomly assigned student participants (n = 102) invested in companies using either static PDF-formatted or XBRL-enabled financial statements. No differences in decision quality (i.e., accuracy) due to technology use were observed. However, participants in the XBRL condition examined less information, used more directed search processes, and evidenced greater efficiency than did participants assigned to the PDF condition. Hence, the results suggest that XBRL SFT affects the use of differing decision processes relative to PDF technology.

Citation

Scarlata, A.N., Williams, K.L. and Vagner, B. (2019), "Can XBRL Improve the Decision Processes and Decision Quality of Novices’ Financial Analysis?", Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 22), Emerald Publishing Limited, Leeds, pp. 87-120. https://doi.org/10.1108/S1475-148820190000022006