Market Reactions to XBRL-Formatted Financial Information: Empirical Evidence from China

2014 ◽  
Vol 10 (3) ◽  
pp. 1-17 ◽  
Author(s):  
Emma Y. Peng ◽  
John Shon ◽  
Christine Tan
Keyword(s):  
Financial Statements ◽  
Financial Information ◽  
Financial Statement ◽  
Decision Making Process ◽  
Average Volume ◽  
Market Reactions ◽  
Event Window ◽  
Business Reporting ◽  
Before And After ◽  
Efficient Processing

XBRL (eXtensible Business Reporting Language) facilitates the efficient processing/interpreting of corporate financial information by investors. This paper examines market reactions to financial statement filings in China in the period before and after the XBRL mandate in China to assess the extent to which XBRL may impact the processing of financial information. It finds that absolute price reactions of financial statement filings are larger (smaller) in the post-XBRL (pre-XBRL) period. This result holds for the cumulative 3-day window surrounding filings, as well as for each individual day during the event window. This paper also finds similar results for the average volume of trading around these event windows. Consistent with its expectations, its findings suggest XBRL financial statements play a significant role in investors' decision making process.

scholarly journals Reliability of Financial Information from the Perspective of Benford’s Law

Entropy ◽  
2021 ◽  
Vol 23 (5) ◽  
pp. 557
Author(s):  
Ionel Jianu ◽  
Iulia Jianu
Keyword(s):  
Financial Reporting ◽  
Capital Market ◽  
Financial Statements ◽  
Financial Information ◽  
Benford’S Law ◽  
Professional Judgment ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Benford's Law ◽  
Before And After

This study investigates the conformity to Benford’s Law of the information disclosed in financial statements. Using the first digit test of Benford’s Law, the study analyses the reliability of financial information provided by listed companies on an emerging capital market before and after the implementation of International Financial Reporting Standards (IFRS). The results of the study confirm the increase of reliability on the information disclosed in the financial statements after IFRS implementation. The study contributes to the existing literature by bringing new insights into the types of financial information that do not comply with Benford’s Law such as the amounts determined by estimates or by applying professional judgment.

Role of Financial Statement in Investment Decision Making Process

2020 ◽  
Vol 9 (1) ◽  
pp. 105-108
Author(s):  
Suraj Bhujel
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Financial Statements ◽  
Vital Role ◽  
Financial Statement ◽  
Quality Information ◽  
Decision Making Process ◽  
Investment Decision Making

It is believed that financial statements are the key documents for any organizations for the investment decision making. Investment decision making depends upon the quality information obtained by the various sources and it is concluded in this research which is based on the findings that financial statement plays a vital role in investment decision making and recommends that no investment decision should be taken without the consideration of a company’s financial statements.

scholarly journals The Value Relevance of Financial Information Under the Influence of Country Risks. The Case of the Indian Listed Companies

2016 ◽  
Vol 9 (2) ◽  
pp. 77-93 ◽  
Author(s):  
Ioan-Bogdan Robu ◽  
Mihai Carp ◽  
Costel Istrate ◽  
Cristian Popescu ◽  
Mihaela-Alina Robu
Keyword(s):  
Financial Market ◽  
Linear Models ◽  
Value Relevance ◽  
Financial Statements ◽  
Country Risk ◽  
Financial Information ◽  
Decision Making Process ◽  
Accounting Numbers ◽  
Set Up ◽  
Over Time

AbstractIn the decision-making process investors need quality financial information based on reported accounting numbers. Such numbers are present in financial statements and must meet a series of fundamental characteristics, such as relevance and faithful representation. The present paper aims to analyse and assess the value relevance of financial information on the financial market in India under the influence of the main country risk components (i.e. economic risk and freedom to set up businesses, corruption control, financial, fiscal, monetary and investment freedom). The research was carried out on a sample of companies listed on the regulated market in India between 2006 and 2014. The results of applying general linear models have shown that, over time, the country risk can have a significant influence on the value relevance of the financial statements reported at the financial market level.

scholarly journals Manipulation of Financial Statements Through the Use of Creative Accounting. Case of Romanian Companies

2020 ◽  
Vol 30 (3) ◽  
pp. 90-107
Author(s):  
Ioana-Lavinia Safta ◽  
Monica Violeta Achim ◽  
Sorin Nicolae Borlea
Keyword(s):  
Decision Making ◽  
Stock Exchange ◽  
Financial Statements ◽  
Financial Information ◽  
Decision Making Process ◽  
Creative Accounting ◽  
Red Flag

AbstractThe manipulation of the information presented through financial statements could represent a significant red flag for suspected fraud. In our paper, we investigated the extent to which the Romanian companies resort to manipulation of information data presented through the reported annual financial statements. For this purpose, we used a group consisting of 62 non-financial companies listed on the Bucharest Stock Exchange for the analyzed period 2017-2018. The results of our study show that a majority percentage of the Romanian companies (approx. 84%) resort to manipulation of information provided through financial statements. Following the analysis carried out by activity fields, the results show that the companies activating in the fields of tourism, constructions, trade and transport resort to the manipulation of financial statements in the percent of 100%, followed by the companies activating in the field of production (86%) and services (50%). Our results are extremely useful to the users of financial information who must acknowledge the risks that they are exposed to in their decision-making process.

scholarly journals РОЗКРИТТЯ НЕФІНАНСОВОЇ ІНФОРМАЦІЇ В ЗВІТНОСТІ ПІДПРИЄМСТВ МАЛОГО БІЗНЕСУ

2020 ◽  
pp. 174-182
Author(s):  
Tetyana Gogol ◽  
Vadym Kolotok
Keyword(s):  
Small Business ◽  
Financial Reporting ◽  
Local Governments ◽  
Labor Relations ◽  
Accounting Standards ◽  
Environmental Issues ◽  
Financial Statements ◽  
Financial Information ◽  
Business Reporting ◽  
Do So

The article substantiates the importance of displaying non-financial information to external and internal users of small business reporting and also proves the need to disclose information on human rights and labor relations, anti-corruption activities, interaction with local governments, environmental issues and so on. Accounting standards governing the formation of various types of non-financial statements have been analyzed, together with the indicators which are further disclosed in such reports in order to confirm analytical information. The types of non-financial reporting constituting Ukrainian enterprises have been considered, the composition of indicators appropriate for disclosing to small business enterprises, which are already submitting reports or planning to do so in the future, have been justified.

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.

Monitoring by Auditors: The Case of Public Housing Authorities

2011 ◽  
Vol 86 (4) ◽  
pp. 1289-1319 ◽  
Author(s):  
Barbara Murray Grein ◽  
Stefanie L. Tate
Keyword(s):  
At Risk ◽  
Public Housing ◽  
Financial Statements ◽  
Financial Information ◽  
Financial Data ◽  
Financial Statement ◽  
Litigation Risk ◽  
Management Incentives ◽  
Reporting Requirements ◽  
Big 4

ABSTRACT We take advantage of the unique reporting requirements of nonprofit public housing authorities (PHAs) to study the effect of audits on financial information both generally and when there are management incentives to misreport financial data. There is little prior research on the effect of audit adjustments in nonprofit settings and conflicting research on how auditors react to management's incentives to misreport. We identify potential financial statement areas at risk of manipulation based on incentives specific to public housing authorities. Using pre- and post-audit financial data for almost 3,600 PHAs across seven years, we find that auditors make economically and statistically significant adjustments to PHA financial statements. In addition, we find evidence that audits appear to reduce potential management bias, particularly to reduce risks of overstatement. Overall, audits appear to matter in this nonprofit, low-litigation risk setting where there is a large concentration of non-Big 4 auditors.

scholarly journals Unpacking the IFRS Implications of COVID-19 for Travel and Leisure Companies Listed on the JSE

2021 ◽  
Vol 13 (14) ◽  
pp. 7942
Author(s):  
Diana da Silva ◽  
Danie Schutte ◽  
Jhalukpreya Surujlal
Keyword(s):  
Design Methodology ◽  
Financial Statements ◽  
Information Design ◽  
Financial Information ◽  
Financial Statement ◽  
Foreseeable Future ◽  
Financial Decisions ◽  
Going Concern ◽  
Utmost Care ◽  
The Impact

Purpose: The main purpose of this article is to study the IFRS implications of COVID-19 for selected travel and leisure companies listed on the JSE. The article investigates how these selected companies disclose financial information regarding the going concern, or in other words; the sustainability of the company, revenue of the company, how the companies made estimations, and more, to account for the impact of the coronavirus pandemic on their financial information. Design/methodology/approach: content analysis was used to analyse the financial statements of ten travel and leisure companies listed on the JSE. This analysis indicated what additional disclosures these companies have in the light of COVID-19. Findings: even though there is no specific IFRS standard providing guidance on the impact of COVID-19, the findings reveal that the companies took utmost care in disclosing information and the impact of COVID-19 in the financial statements. Companies cautiously considered the impact of the coronavirus on their financial results and provided the users of these financial statements with transparent financial information, regarding going concern and sustainability of the company, revenue, estimations, and more. Originality/value: a new economic crisis, different from any other economic crises, emerged as a result of COVID-19 and the IFRS implications such as, the effect on sustainability and going concern, impact on revenue of companies, financial estimations during the coronavirus pandemic, the effect of COVID-19 on the financial subsequent events and other financial statement disclosures is still unclear. This study is deemed of vital importance as the users of financial statements require all the necessary information about how COVID-19 has affected these companies, and whether or not these companies will be sustainable in the foreseeable future, as to enable the financial statement users to make informed financial decisions.

scholarly journals Using the Beneish M-score model: Evidence from non-financial companies listed on the Warsaw Stock Exchange

2020 ◽  
Vol 17 (4) ◽  
pp. 389-401
Author(s):  
Artur Hołda
Keyword(s):  
Factor Model ◽  
Stock Exchange ◽  
Financial Statements ◽  
Small Sample ◽  
Financial Information ◽  
Financial Statement ◽  
Control Group ◽  
Warsaw Stock Exchange ◽  
History Of ◽  
Score Model

The risk of distortion of financial statements has been growing. Following the 2008 crisis, recipients of financial information are increasingly focusing on the likelihood of financial statements being distorted through fraudulent presentation of financial information. Therefore, scientific research pays more attention to models capable of detecting financial statement manipulation.The paper aims to present the principles of functioning and the possibility of using the Beneish M-score model in Polish realities. It analyzes the history of more than 30 companies listed on the Warsaw Stock Exchange to select those whose history indicates that they can be classified as manipulators, and to select the same number of companies from the control group that are considered as non-manipulators.The research method involves the analysis of empirical data on companies listed on the Warsaw Stock Exchange. The analysis showed the 8-factor Beneish model identified manipulators with 100% accuracy and succeeded in identifying non-manipulators. The effectiveness of the 5-factor model was much lower. To serve the purpose of the study, the effectiveness of the Beneish model was tested on a small sample of Polish listed companies as an introduction to a planned larger scale research. The results obtained are consistent with the results of numerous studies by authors from various countries and confirm the effectiveness of the Beneish model in detecting financial statement manipulation. AcknowledgmentThe publication is sponsored by funds from the Cracow University of Economics for the maintenance and development of research potential.

scholarly journals The Quality of Local Government Financial Statements and The Use of Financial Information in Decision Making

2020 ◽  
Vol 3 (1) ◽  
pp. 73
Author(s):  
Raden Muhammad Rachmansyah Shadiqiawan ◽  
Sri Mulyani
Keyword(s):  
Decision Making ◽  
Local Government ◽  
Hypothesis Testing ◽  
Local Governments ◽  
Financial Statements ◽  
Financial Information ◽  
Financial Statement ◽  
Government Decision ◽  
Testing Data

Financial statements contain information that is very helpful for users in making decisions. This study examines whether there are differences in the use of financial statement information decision making between the local government that obtain unqualified and qualified opinion for their financial statements. This study used the Mann Whitney test for hypothesis testing. Data was collected through a survey using a questionnaire on five local governments in West Java.The results of this study indicate that there are no significant differences in the use of financial statement information for local government decision-making, both in local governments that obtain unqualified and qualified opinions for their financial statements. This study also found that the financial statements most often used as a basis for decision making in the two groups of local governments are budget realization statement. 

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