Voluntary XBRL Adopters and Firm Characteristics: An Empirical Analysis

Abstract

Some of the governance weaknesses stem from the information asymmetry between insiders and the investing public.One way to mitigate the information asymmetry problem is to enhance accounting disclosures through XBRL format.In this paper, we analyze financial characteristics of voluntary adopters of XBRL.We build a multivariate logistic regression model to examine the relationship between firm characteristics and voluntary XBRL adopters.The new results of this study indicate that plant intensity (political costs), PE ratio (growth), and inventory ratio (complexity) are useful in discriminating voluntary "XBRL adopters" from non-adopters.We also confirm prior results with respect to firm size and debt ratio.We also build a multiple regression model and use the Governance Score developed by Brown and Caylor (2006) to further investigate the relationship between corporate governance rating and operating performance for voluntary XBRL adopters.Our results indicate that current ratio (liquidity), size, and auditor type are associated with corporate governance rating for voluntary adopters of XBRL.

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