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Track 8: Research on XBRL Interactive data and investor decision making

19 th XBRL International Conference “Reducing regulatory burden with XBRL: a catalyst for better reporting” June 22-25, 2009 Paris, France. Track 8: Research on XBRL Interactive data and investor decision making Joanne Locke, Alan Lowe and Andy Lymer. Acknowledgements.

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Track 8: Research on XBRL Interactive data and investor decision making

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  1. 19th XBRL International Conference“Reducing regulatory burden with XBRL: a catalyst for better reporting”June 22-25, 2009Paris, France Track 8: Research on XBRL Interactive data and investor decision making Joanne Locke, Alan Lowe and Andy Lymer

  2. Acknowledgements The support of the ICAEW’s charitable trust is gratefully acknowledged. We would also like to thank the participants and software vendors who offered assistance.

  3. What we did • Experiment • Students as proxies for retail investors • Two investment decisions, one using PDF and one XBRL tagged data in Excel spreadsheet • Each participant used both data formats • 2 X 2 within subjects, repeated measures experiment design • Randomised which data format they used first • Information embedded in the footnotes should be integrated into the decision

  4. Why we did it • Important to consider users (investors) • Surveys of users return consistently results of low awareness of XBRL (even professional analysts) • Only way at the moment is to use experiments since XBRL is not widely known or used by investors • Tendency by regulators, software vendors etc.. to ‘speak on behalf of’ investors without supporting research

  5. What we learned • Important to think about what functionality to include in the experimental setting • ‘Searchability’ (Hodge et al, 2004 ) is too basic – can do that in PDF. • We did do: • Automatic calculation of ratios (fixed format) • Linking to narrative information (footnotes) • Display tags (reference information) • Full statements with links to notes too • We didn’t do because of technical difficulties: • Web search and download • Customisable template for analysis

  6. What we learned • Important to think about number of companies to analyse – we included on two sets of two companies • Trade-off between realistically long reports and time participants/investors prepared to take • Important to get information about why they made the decision they did – some were not using the expected investment decision making model

  7. Results

  8. Results

  9. Results • Perception of ‘interactive data’ overwhelmingly positive, but no impact on decision making • Automatic ratio calculation • Perceived as more ‘accurate’ • Less motivation to integrate footnote information? • 24% still preferred look and feel of PDF • ‘real’ financial report

  10. Conclusions • Tools and analytic packages that act as an interface between interactive data and investors must be well designed to encourage integration of narrative and financials – otherwise XBRL may not result in better decisions • Carefully constructed experiments are potentially useful • We need a deeper understanding of retail investors’ needs and decision making approaches – lots of research – preferably with ‘real’ investors

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