Interactive Data: Technology and Cost of Capital

S. Sarah Zhang, Ryan Riordan, Christof Weinhardt

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

We examine the introduction of the voluntary filing program (VFP) by the Securities and Exchange Commission (SEC) for the introduction of XBRL (eXtensible Business Reporting Language), or Interactive Data as called in the US. XBRL is a machine-readable standardized format for financial reports. The VFP allowed firms to file annual and quarterly reports using XBRL. This program represents a quasi-natural experiment to isolate the effects of an improvement in the information environment of program participants. We study two documented effects of voluntary disclosure (Healy and Palepu, 2001), reduced cost of capital and increased information intermediation. Our results show a decrease in the cost of capital, especially for financial and IT firms, and an increase in information intermediation. These effects support existing literature on the adoption of IT in firms and voluntary corporate disclosure and sheds light on the decision to be an early adopter of XBRL reporting technologies.

Original languageEnglish
Title of host publicationAccounting Information Systems for Decision Making
Place of PublicationBerlin Heidelberg
PublisherSpringer Nature
Chapter14
Pages233-247
Number of pages15
ISBN (Electronic)978-3-642-35761-9
ISBN (Print)978-3-642-35760-2
DOIs
Publication statusPublished - 2013
Event20th European Conference on Information Systems, ECIS 2012 - Barcelona, Spain
Duration: 10 Jun 201213 Jun 2012

Publication series

NameLecture Notes in Information Systems and Organisation
Volume3

Conference

Conference20th European Conference on Information Systems, ECIS 2012
Country/TerritorySpain
CityBarcelona
Period10/06/1213/06/12

Keywords

  • Cost of capital
  • Financial reporting
  • Information
  • Voluntary disclosure

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