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The Accounting Review

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The Effects of Pro Forma Earnings Disclosures on Analysts' and Nonprofessional Investors' Equity Valuation Judgments
This paper presents an experiment that examines the effect of pro forma earnings disclosures on the judgments of analysts (i.e., more sophisticated investors) and nonprofessional (i.e., less sophistic...

The Intertemporal Exercise and Valuation of Employee Options
We propose a multiperiod model to value employee options allowing for the possibility that a risk-averse employee strategically exercises her options over time rather than at a single date. Our result...

The Accounting Review / Volume 79 / Issue 3 / ARTICLES

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Does Search-Facilitating Technology Improve the Transparency of Financial Reporting?

The Accounting Review 79 (3), 687 (2004);
doi: 10.2308/accr.2004.79.3.687

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Frank D. Hodge and Jane Jollineau Kennedy
University of Washington.

Laureen A. Maines
Indiana University.

XBRL (eXtensible Business Reporting Language) is an emerging technology that facilitates directed searches and simultaneous presentation of related financial statement and footnote information. We investigate whether using an XBRL-enhanced search engine helps nonprofessional financial statement users acquire and integrate related financial information when making an investment decision. We conduct our investigation in the context of recognition versus disclosure of stock option compensation. Our results reveal that many users do not access the technology, but those who do use it are better able to acquire and integrate information. Specifically, we find that when stock option accounting varies between firms, the use of an XBRL-enhanced search engine increases the likelihood that individuals acquire information about stock option compensation disclosed in the footnotes. We also find that XBRL helps individuals integrate the implications of this information, resulting in different investment decisions between individuals who use and do not use the search engine. Our results suggest that search-facilitating technologies, such as XBRL, aid financial statement users by improving the transparency of firms' financial statement information and managers' choices for reporting that information. Our results also reveal that wide publicity about the benefits of using search-facilitating technology may be needed to induce financial statement users to access the technology. ©2004 American Accounting Association

History: | Submitted November 2002; accepted December 2003

Permalink:

http://link.aip.org/link/ACRVAS/v79/i3/p687/s1

PUBLICATION DATA

ISSN:

0001-4826 (print)   1558-7967 (online)

Publisher:

American Accounting Association

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