Yanchao Rao and Ken Huijin Guo
The US Securities and Exchange Commission (SEC) requires public companies to file structured data in eXtensible Business Reporting Language (XBRL). One of the key arguments behind…
Abstract
Purpose
The US Securities and Exchange Commission (SEC) requires public companies to file structured data in eXtensible Business Reporting Language (XBRL). One of the key arguments behind the XBRL mandate is that the technical standard can help improve processing efficiency for data aggregators. This paper aims to empirically test the data processing efficiency hypothesis.
Design/methodology/approach
To test the data processing efficiency hypothesis, the authors adopt a two-sample research design by using data from Compustat: a pooled sample (N = 61,898) and a quasi-experimental sample (N = 564). The authors measure data processing efficiency as the time lag between the dates of 10-K filings on the SEC’s EDGAR system and the dates of related data finalized in the Compustat database.
Findings
The statistical results show that after controlling for potential effects of firm size, age, fiscal year and industry, XBRL has a non-significant impact on data efficiency. It suggests that the data processing efficiency benefit may have been overestimated.
Originality/value
This study provides some timely empirical evidence to the debate as to whether XBRL can improve data processing efficiency. The non-significant results suggest that it may be necessary to revisit the mandate of XBRL reporting in the USA and many other countries.
Details
Keywords
Abstract
Subject area
Investments.
Study level/applicability
The case is suitable for students with diverse backgrounds – from different countries with different cultures, and from different programs (undergraduate or graduate). The case will be used for an all-English course “The research of Chinese stock markets” and has been used for the course “Portfolio theory and management” (junior student level) at Nankai University.
Case overview
The case introduces Chinese stock markets' uniqueness that there exists a huge number of previously nontradable shares. The release of the shares radically changes the markets' balance and causes the absolute dominance of stock supply over stock demand. Based on the analysis for ICBC, the case demonstrates that the dominance can explain the drop of ICBC's stock price by supply-demand law but fundamental analysis cannot.
Expected learning outcomes
The case will help students to understand the uniqueness of Chinese stock markets and the applicability of supply-demand law in the markets and then be able to make investment decisions.
Social implications
The case can help to educate not only students but also Chinese and foreign investors about the uniqueness of Chinese stock markets and arm the students and investors with the supply-demand methodology to analyse the markets and the reasoning of when and how to invest.
Supplementary materials
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