XBRL Filings

Published December 14, 2021
By Jennifer Howard, Jie Zhou

The Timeliness of XBRL Filings: An Empirical Examination

The SEC has historically taken advantage of technological advances to improve the accessibility and timeliness of financial statement information. The most recent advancement in financial reporting is the use of XBRL (eXtensible Business Reporting Language) to provide information in a machine-readable format. In 2009, the SEC began requiring that XBRL data be submitted simultaneously with the 10-K filing.  However, it is not always the case that firms will do so. In this study, we aim to shed light on the factors that may be associated with non-timely XBRL filings.

Timeliness in one of many dimensions of data quality, but more importantly, non-timeliness may be indicative of reporting or other weaknesses. To be timely, the XBRL data must be filed concurrently with the 10-K filing. In general, the time to complete a task will depend on factors such as complexity and experience. A non-timely XBRL filing should increase as the XBRL filing becomes more complex and decrease with the experience of the service provider. Many firms use a service provider to assist with XBRL preparation. The firm remains responsible for the accuracy of the XBRL filing; therefore, it is critical that the service provider completes the work in a timely manner so that the company has enough time to review the file for accuracy and completeness. Also, since the audit report must be issued before the annual report and XBRL documents can be finalized, a non-timely XBRL filing should be more likely with a newly hired auditor following an auditor switch and less likely in the presence of an experienced and resourceful Big 4 auditor.

Using a matched sample of non-timely and timely XBRL filers over the period 2009-2016, we find that non-timely XBRL filings are more likely when the filing is more complex (e.g., due to taxonomy extensions) and when the firm has a new auditor. In contrast, using an experienced service provider or a Big 4 auditor appears to improve XBRL filing timeliness.  Anecdotal evidence finds that late 10-K filings tend to be more common among non-timely XBRL filers, which could indicate other underlying causes such as financial reporting and control weaknesses for NT XBRL filers. Consistent with this conjecture, we find that the market responds negatively to NT XBRL filings.

Our results provide insight into the implementation of a new filing requirement intended to improve accessibility to financial information. In particular, our research helps to inform regulators about potential issues and factors that can cause delayed XBRL filings. Going forward, regulators may also want to consider these factors when assessing the effectiveness of efforts to increase the quality of the XBRL data. Regulators may want to consider these factors in future efforts to use technological advances to improve accessibility to information. Further, we note that non-timely XBRL filings are concentrated among smaller firms, which contributes to the debate over the reporting requirements for small filers.