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XBRL and Accruals: Empirical Evidence from China

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  • EMMA YAN PENG
  • JOHN SHON
  • CHRISTINE TAN

Abstract

We examine whether XBRL adoption by publicly traded firms on the Shanghai Stock Exchange and Shenzhen Stock Exchange is related to the level of total accruals that firms report in the pre‐XBRL versus post‐XBRL periods. Our results indicate that the level of total accruals in the post‐XBRL period is lower relative to the pre‐XBRL period. This finding is robust to several controls for macroeconomic conditions and firm fundamentals. Moreover, we find this main effect is most prominent for firms that are most likely to benefit from greater transparency: high‐growth firms, small firms, and firms in high‐technology industries. One interpretation of our results is that XBRL implementation decreases investor’s information acquisition costs and thereby improves their ability to detect earnings management; managers in turn reduce accruals. XBRL et régularisations : données empiriques chinoises Résumé Les auteurs se demandent si l’adoption du XBRL par les sociétés inscrites aux bourses de Shanghaï et de Shenzhen est liée au volume total des régularisations présentées par ces sociétés dans la période antérieure au XBRL par rapport à la période postérieure au XBRL. Les résultats qu’ils obtiennent indiquent que le volume total des régularisations de la période postérieure au XBRL est inférieur à celui de la période antérieure au XBRL. Cette observation résiste à plusieurs contrôles relatifs aux conditions macroéconomiques et aux caractéristiques fondamentales des sociétés. De plus, les auteurs constatent que ce fait important est le plus marqué pour les sociétés qui sont les plus susceptibles de tirer profit d’une transparence accrue : entreprises à forte croissance, petites entreprises et entreprises des secteurs de haute technologie. L’une des interprétations de ces résultats est la suivante : la mise en œuvre du XBRL diminue les coûts d’acquisition d’information pour les investisseurs et améliore par conséquent leur capacité de déceler la gestion du résultat; à leur tour, les cadres réduisent les régularisations.

Suggested Citation

  • Emma Yan Peng & John Shon & Christine Tan, 2011. "XBRL and Accruals: Empirical Evidence from China," Accounting Perspectives, John Wiley & Sons, vol. 10(2), pages 109-138, June.
    • Handle: RePEc:wly:accper:v:10:y:2011:i:2:p:109-138
    DOI: 10.1111/j.1911-3838.2011.00021.x
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    1. Wafa Sassi & Hakim Ben Othman & Khaled Hussainey, 2023. "The determinants of eXtensible Business Reporting Language (XBRL) adoption : a cross-country study," Post-Print hal-04191489, HAL.
    2. Songsheng Chen & Jun Guo & Qingqing Liu & Xiaoxiao Tong, 2021. "The impact of XBRL on real earnings management: unexpected consequences of the XBRL implementation in China," Review of Quantitative Finance and Accounting, Springer, vol. 56(2), pages 479-504, February.
    3. Diego Valentinetti & Michele A. Rea, 2013. "XBRL for Financial Reporting: Evidence on Italian GAAP versus IFRS," Accounting Perspectives, John Wiley & Sons, vol. 12(3), pages 237-259, September.
    4. Zhenyang Bai & Manabu Sakaue & Fumiko Takeda, 2014. "The Impact of XBRL Adoption on the Information Environment: Evidence from Japan," The Japanese Accounting Review, Research Institute for Economics & Business Administration, Kobe University, vol. 4, pages 49-74, December.

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