Two Essays on XBRL Adoption




Shen, Si

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The dissertation consists of two essays on XBRL adoption and its impact on market participants. Compared to traditional reporting format, XBRL reporting format can potentially increase the speed, accuracy, and usability of financial disclosure because it facilitates the collection and processing of financial statement information at lower costs. Therefore, this dissertation investigates the lenders' and short sellers' responses to see if XBRL adoption impacts these market participants. In the first essay, I examine the impact of XBRL adoption on loan renegotiation in U.S. syndicated loans. Because loan renegotiation terms are widely used and reflect new information concerning credit quality and outside options, XBRL filings with embedded new information should attract lenders' attention. First, XBRL adoption is associated with higher loan amounts and lower loan spreads. In addition, investors' search for borrowers' accounting reports (including XBRL filings and all EDGAR filings) is associated with lower loan spreads. Last, abnormal extension ratios are associated with higher loan amounts and lower spreads. Further tests prove that abnormal extension ratios and investors' search for XBRL filings impact loan renegotiation terms simultaneously. This novel evidence expands our knowledge of how information acquisition via XBRL filings and extended tags in XBRL filings facilitate the loan renegotiation process. In the second essay, I investigate whether retail and institutional short sellers benefit from XBRL filings. Prior literature finds mixed results of XBRL adoption's impact on analysts. Short sellers should utilize the XBRL filings for their analysis and trading strategy as they are more sophisticated than analysts. Firstly, retail short sellers revise daily short volume and daily short transactions on the filing date in the mandatory adoption period. Institutional short sellers adjust short interest on the filing date in the mandatory adoption period. Moreover, for retail short sellers, the abnormal usage of extended tags is associated with lower daily short volume and more short transactions for large-cap firms and higher short volume and fewer short transactions for small-cap firms on the filing date. For institutional short sellers, abnormal usage of extended tags is associated with lower short interest for large-cap firms and higher short interest for small-cap firms.


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Market participants, XBRL adoption, XBRL filings, Small-cap firms