Publication Type
Journal Article
Version
acceptedVersion
Publication Date
2-2026
Abstract
We examine whether the SEC’s XBRL-formatted financial reporting mandate allows investors to better process public financial information, reducing the extent to which managers learn private information from stock price. We find a significant decrease in the investment-price sensitivity for firms that started to file their 10-Ks in an XBRL format, consistent with a reduction in the cost of information processing crowding out private information in stock price. We also find that the decrease in the investment-price sensitivity associated with XBRL adoption is more pronounced for firms with higher business and information complexity and for firms with higher incentives for managers to learn from stock price. Overall, our results suggest that XBRL can reduce the feedback effect of stock price and impair real efficiency as it increases investors’ ability to synthesize and integrate financial data for analysis.
Keywords
Disclosure processing costs, Feedback effect of stock price, Managerial learning, XBRL
Discipline
Accounting | Corporate Finance
Research Areas
Corporate Reporting and Disclosure
Publication
European Accounting Review
Volume
35
Issue
2
First Page
479
Last Page
502
ISSN
0963-8180
Identifier
10.1080/09638180.2025.2476131
Publisher
Taylor and Francis
Citation
CHO, Young Jun; HUANG, Ying-Chi; and YANG, Holly I..
XBRL-formatted financial reporting and the feedback effect of price. (2026). European Accounting Review. 35, (2), 479-502.
Available at: https://ink.library.smu.edu.sg/soa_research/2097
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1080/09638180.2025.2476131