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Study: XBRL Leads to Better Coverage, More Liquidity

Tammy Whitehouse | August 24, 2012

Companies that use XBRL to file financial statements lower their cost of equity capital and increase their stock liquidity, according to a recent study out of Singapore.

Three academics in the accounting department at National University of Singapore studied the filings of 2,302 companies from 2003 to 2011 to see how their cost of equity capital changed through the years they adopted XBRL to submit financial statements to the Securities and Exchange Commission. A handful of voluntary early adopters began using XBRL, which produces machine-readable data to make financial statements easier to search and sort, as early as 2007. The SEC made adoption mandatory beginning in 2009 for the largest public companies, with a second wave adopting in 2010 and the smallest companies getting onboard in 2011.

The study says...

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