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

2004 ◽  
Vol 79 (3) ◽  
pp. 687-703 ◽  
Author(s):  
Frank D. Hodge ◽  
Jane Jollineau Kennedy ◽  
Laureen A. Maines
Keyword(s):  
Search Engine ◽  
Financial Reporting ◽  
Investment Decision ◽  
Investment Decisions ◽  
Simultaneous Presentation ◽  
Stock Option ◽  
Financial Statement ◽  
Business Reporting ◽  
Option Compensation ◽  
Stock Option Compensation

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.

The Improvement of Governance Decision Making Using XBRL

2011 ◽  
Vol 7 (2) ◽  
pp. 11-18 ◽  
Author(s):  
Ahmad Ahmadpour
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Relevant Information ◽  
Simultaneous Presentation ◽  
Stock Option ◽  
Financial Information ◽  
Financial Statement ◽  
Extensible Markup ◽  
Technology Users ◽  
Option Compensation

eXtensible Business Reporting Language (XBRL) has the potential to influence users’ processing of financial information and their judgments and decisions. XBRL is an eXtensible Markup Language (XML)-based language, developed specifically for financial reporting. XBRL, as a search-facilitating technology, contributes to direct searches and simultaneous presentation of related financial statement, and facilitates processing footnote information which could help financial statements’ users. XBRL is more than a distribution mechanism for data or facilitating technology. XBRL has the potential to significantly improve corporate governance. Putting that potential into practice requires an XBRL taxonomy model that is data based instead of document based. This paper hypothesizes that in the presence of search-facilitating technology, users’ judgments of financial statement reliability will be influenced by the choice of recognition versus disclosure of stock option compensation than in the absence of search-facilitating technology. When the stock option accounting varies between two firms, the search technology helps in both acquiring and integrating relevant information. The paper suggests the implementation of XBRL improves transparency of financial information and managers’ choices for reporting that information.

The Improvement of Governance Decision Making Using XBRL

2012 ◽  
pp. 121-128
Author(s):  
Ahmad Ahmadpour
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Relevant Information ◽  
Simultaneous Presentation ◽  
Stock Option ◽  
Financial Information ◽  
Financial Statement ◽  
Extensible Markup ◽  
Technology Users ◽  
Option Compensation

eXtensible Business Reporting Language (XBRL) has the potential to influence users’ processing of financial information and their judgments and decisions. XBRL is an eXtensible Markup Language (XML)-based language, developed specifically for financial reporting. XBRL, as a search-facilitating technology, contributes to direct searches and simultaneous presentation of related financial statement, and facilitates processing footnote information which could help financial statements’ users. XBRL is more than a distribution mechanism for data or facilitating technology. XBRL has the potential to significantly improve corporate governance. Putting that potential into practice requires an XBRL taxonomy model that is data based instead of document based. This paper hypothesizes that in the presence of search-facilitating technology, users’ judgments of financial statement reliability will be influenced by the choice of recognition versus disclosure of stock option compensation than in the absence of search-facilitating technology. When the stock option accounting varies between two firms, the search technology helps in both acquiring and integrating relevant information. The paper suggests the implementation of XBRL improves transparency of financial information and managers’ choices for reporting that information.

The Evolution of Stock Option Accounting: Disclosure, Voluntary Recognition, Mandated Recognition, and Management Disavowals

2006 ◽  
Vol 81 (5) ◽  
pp. 1073-1093 ◽  
Author(s):  
James R. Frederickson ◽  
Frank D. Hodge ◽  
Jamie H. Pratt
Keyword(s):  
Stock Option ◽  
The Other ◽  
Financial Statement ◽  
Accounting Disclosure ◽  
Present Evidence ◽  
Income Statement ◽  
Option Compensation ◽  
Stock Option Compensation

In this study we report the results of an experiment that examines how relatively sophisticated financial statement users interpret management stock option compensation disclosures under SFAS No. 123 and SFAS No. 123R. We predict and find that mandated income statement recognition, as required under SFAS No. 123R, leads to higher user assessments of reliability than either voluntary income statement recognition or voluntary footnote disclosure, options allowed under SFAS No. 123. Users view voluntary footnote disclosure as the least reliable reporting alternative. We also examine the amount users invest in response to these accounting treatments, and find that users invest more in a firm when management chooses income statement recognition than when management chooses footnote disclosure. We find no difference in investment amounts between mandated recognition and either voluntary recognition or footnote disclosure. Finally, although we find that these results are insensitive to whether management explicitly disavows the reliability of stock option expense, we present evidence that, in side-by-side comparisons, where one firm disavows and the other does not, disavowals may affect user judgments and decisions.

Audit Committee Incentives and the Resolution of Detected Misstatements

2015 ◽  
Vol 34 (4) ◽  
pp. 109-137 ◽  
Author(s):  
Marsha B. Keune ◽  
Karla M. Johnstone
Keyword(s):  
Audit Committee ◽  
Positive Association ◽  
Stock Option ◽  
Economic Incentives ◽  
Data Availability ◽  
Audit Committees ◽  
Analyst Forecast ◽  
Agency Conflicts ◽  
Option Compensation ◽  
Stock Option Compensation

SUMMARY We investigate the role of audit committee economic incentives in judgments involving the resolution of detected misstatements. The results reveal a positive association between audit committee short-term stock option compensation and the likelihood that managers are allowed to waive income-decreasing misstatements that, if corrected, would have caused the company to miss its analyst forecast. Complementary results reveal a positive association between the audit committee long-term stock option compensation and the likelihood that managers are allowed to waive income-increasing misstatements when the company reports just missing, meeting, or beating its analyst forecast. These findings illustrate agency conflicts that can arise when compensating audit committees with options. We obtain these results while controlling for CEO option compensation and audit committee characteristics, along with indicators of corporate governance, auditor incentives, and company characteristics. Data Availability: Data used in the study are available from public sources

scholarly journals DAMPAK STRUKTUR MODAL PADA SENSITIVITAS PENERAPAN KOMPENSASI OPSI SAHAM KARYAWAN TERHADAP KINERJA

2017 ◽  
Vol 14 (1) ◽  
pp. 1
Author(s):  
Nur Fadjrih Asyik
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Stock Options ◽  
Stock Option ◽  
Company Performance ◽  
Employee Stock Option ◽  
Sensitivity Level ◽  
The Impact ◽  
Option Compensation ◽  
Stock Option Compensation

This study aims to test whether the management that receive compensation in the form of stock options having an positive impact on company performance. This study considers the external performance measurement by identifying Cumulative Abnormal Return (CAR). In addition, this study aims to test whether the company's capital structure affects the sensitivity level of employee stock option compensation and firm performance. Capital structure is measured with debt to equity ratio. The result indicates that the proportion of Employee Stock Option Plan (ESOP) influence company performance in accordance with the predictions. This shows that the more stock options offered to employees then came a sense of belonging which resulted in more motivated managers to improve company performance. Furthermore, the higher the market performance of companies that can be achieved, the higher the profit (gain) will be obtained by the recipient of stock options. In addition, this study also shows that the impact of stock option grants at the company's performance declined with the greater capital structure of liability. This shows that the capital structure of liabilities will lower the sensitivity level of employee stock option compensation and firm performance. The higher the company's liabilities would reduce the rights of the owner of the dividends each period in accordance with the ownership of shares held since the company must take into account the interest costs to be paid to the creditor.

Sign in / Sign up

Export Citation Format

Share Document