Research On XBRL Financial Reporting Taxonomy: Quality, Economic Consequence, And Improvement

Internet Financial Reporting will be developed with innovation of the Internet service, and Internet service will be developed with innovation of the internet technology. XBRL is an appliance of XML in the financial reporting. Its application is increasingly broadened and gradually penetrating to every process of supply chains of financial reporting. But There are some misunderstandings of XBRL: (1)one side, some scholars consider that the studying on XBRL is not part of accounting field because XBRL will not change the rule of accounting and information disclosure;(2) on the other side, some scholars consider that financial reporting based on XBRL is only the change of disclosure format and the innovation on XBRL can be realized by researchers who are familiar with information technology. But financial reporting based XBRL is not only the change of disclosure format. Its key is to define information elements based on the rules and principles of accounting and disclosure, and then to tag the information elements in the frame of XML. The definition and tags of information are made of the taxonomy of XBRL financial reporting. Integrality and sufficiency of taxonomy determine the integrality of information of XBRL financial reporting. So the theory study on taxonomy of XBRL financial reporting will be the keystone.This dissertation will examine three aspects of taxonomy of XBRL Financial Reporting: (1) Level of definition on information in financial reporting. This aspect mainly studies whether the present information defined in taxonomy of XBRL financial reporting meets the requirement of the rule of accounting and disclosure? And how well the proposed taxonomy for financial statements corresponds to firm's preferred reporting practices? (2) Economic consequence of the level of XBRL financial reporting taxonomy. This aspect mainly studies whether the definition level of XBRL taxonomy will influence the decision-making of investors? (3) Improving of XBRL financial reporting taxonomy. This aspect mainly studies what policy should the related departments such as the institute department of XBRL taxonomy and regulation department of information disclosure adopt?These aspects are examined one by one combining criterion research method with empirical research method. The main conclusions of the dissertation can be listed as follows.1. The theoretical framework of setting of XBRL Financial Reporting taxonomyIn the dissertation, I construct a concept model of XBRL financial reporting taxonomy based on Ontology theory and financial information elements. More detailed elements can be excavated based on Ontology theory. In process of constituting framework of taxonomy system, first, the field and area covered with information of taxonomy should be confirmed, and it should follow the XBRL specification and rule of accounting system and information disclosure. And then, basic modules of taxonomy system should be further classified, the subjects of information elements should be taken out according to rules of biology taxonomy, and then relevant attribute and state of elements should be put. This theoretical framework is also the base of my future study.2. The level of information defined in the XBRL financial reporting taxonomyI examine it from two aspects: (1) I attempt to match each item of financial statement regulated in accounting institution, accounting rule and information disclosure rule with a XBRL taxonomy of Chinese information disclosure to examine the fitness between them. (2) I attempt to match each note item in 2003 annual financial statements of companies including 12 industries listed in ShangHai Stock Exchange with a XBRL taxonomy of Chinese information disclosure to examine their fitness. And then examine determinants of the fitness between firm's preferred reporting practices and taxonomy standards. Analyses show that there are some difference on average between information elements defined in XBRL financial reporting taxonomy and information regulated in rules of accounting and disclosure. The fitness between firm's preferred reporting practices and taxonomy standards is worse. In the dissertation, I also test the determinants of difference between firm's preferred reporting practices and taxonomy standards by the 371 A-listed company samples from ShangHai Securities Exchange, China. I find that the biggest shareholder, decentralization level of circulating shareholders, firm size, performance of companies and debt level have an influence on the differences. Institute department of XBRL taxonomy should improve taxonomy considering the above-mentioned corporation characters.3. The theoretical analyses and test of economic consequence of XBRL financial reporting taxonomyThe information level defined in XBRL financial reporting will directly determine information disclosure level;I test the economic consequence of information disclosure level of XBRL financial reporting to test indirectly the economic consequence of XBRL taxonomy. I construct a signal game model to analyses the influence of information disclosure level of XBRL financial reporting on decision-making of investors; and then use laboratory study to test it. The result of lab study support my deducing, namely, the information level defined in XBRL financial reporting taxonomy has economic consequences.4. Research on regulation of XBRL Financial Reporting taxonomyThe dissertation firstly improve XBRL taxonomy mainly from four aspects including understanding of XBRL, establishing the constitute organization of XBRL taxonomy whose sponsor and leader should be accounting regulator and rule constitute institution, improving Financial Reporting Taxonomies Architecture, expanding and consummating information elements in basis taxonomies. Secondly it studies basic assurance theory of XBRL financial reporting based on period and continuum financial reporting. Lastly it reviews the restrict factors of XBRL financial reporting assurance from the aspects of the appliance status of auditing software in Chinese CPAs and the cognition and attitude of CPAs. Result of the questionnaire shows that Chinese CPAs are short of thorough cognition of XBRL and the appliance status of auditing software is rather low.Following are the primary innovation of this dissertation in four aspects.1. The theoretical framework of setting of XBRL Financial Reporting taxonomyAlthough many literatures have examined the XBRL, but a few literatures study XBRL taxonomy, especially little literature focus on the theory study on XBRL taxonomy. At present, no literatures focus on basic theory, rule and according of information element definition. I as a first researcher use Ontology theory to constitute financial reporting taxonomy, and then construct a concept model of XBRL financial reporting taxonomy integrating with financial information elements. And I study that subjects of information elements should be extracted according to rules of biology taxonomy, and then relevant attribute and state of elements should be endowed.2. The economic consequence of the information level of XBRL financial reporting taxonomyI construct a signal game model to conclude that information disclosure level of financial reporting may influence decision-making, and then use laboratory study to test it. Namely I test that more influence of high level of disclosure under the XBRL reporting than under the PDF reporting. Because information level of XBRL financial reporting is determined by information level defined in XBRL financial reporting taxonomy, and then test the economic consequence of information disclosure of XBRL reporting from other aspects. Comparing most of describing study on XBRL taxonomy, constructing model and laboratory study have comparative innovation.3. The fitness between rules of accounting and information disclosure and XBRL taxonomyAt present, no any legalized and uniform standard is used to evaluate the XBRL financial reporting taxonomy. I try to establish a method to evaluate it from the gist of instituting XBRL financial reporting taxonomy. I evaluate the integrality of information defined in taxonomy. Some researchers have examined the fitness between firm's preferred reporting practices and XBRL taxonomy standards only from the items of financial reporting, I extend and improve the study object and evaluate the level of information defined in financial reporting and the note. The most innovation of this issue is that I evaluate the fitness between rules of accounting and information disclosure and XBRL taxonomy. Thereby the theory and data sustain is offered to improve the financial reporting taxonomy.4. Study on the restrict factors of XBRL financial reporting assurance XBRL financial reporting assurance is an exterior ensurement of improving the XBRL financial reporting. XBRL financial reporting assurance should be carried through by auditors who are familiar with XBRL and should be supported by audit software. I has reviewed restrict factors of XBRL financial reporting assurance from applying status of auditing software in Chinese CPAs and cognition and attitude of CPAs. The result of this investigation will offer the gist on policy suggestion of improving the taxonomy.