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Interactive Data: Technology and Cost of Capital

In: Accounting Information Systems for Decision Making

Author

Listed:
  • S. Sarah Zhang

    (Karlsruhe Institute of Technology, School of Economics and Business Engineering)

  • Ryan Riordan

    (Karlsruhe Institute of Technology, School of Economics and Business Engineering)

  • Christof Weinhardt

    (Karlsruhe Institute of Technology, School of Economics and Business Engineering)

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, 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.

Suggested Citation

  • S. Sarah Zhang & Ryan Riordan & Christof Weinhardt, 2013. "Interactive Data: Technology and Cost of Capital," Lecture Notes in Information Systems and Organization, in: Daniela Mancini & Eddy H. J. Vaassen & Renata Paola Dameri (ed.), Accounting Information Systems for Decision Making, edition 127, pages 233-247, Springer.
    • Handle: RePEc:spr:lnichp:978-3-642-35761-9_14
    DOI: 10.1007/978-3-642-35761-9_14
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