transaction, supervision and disclosure: standardizing...

Academic Track @ XBRL Week Frankfurt, ECBJune, 2016

Transaction, supervision and disclosure: standardizing a continuum

Ignacio Boixo [CEN workshop on XBRL, Chair]in collaboration with AECA Integrated Suite Working Group is.aeca.es/en

Agenda

Continuum: several layers of interoperability.

The role of XBRL: connecting levels.

Research agenda.

Some references

Agenda

Continuum: several layers of interoperability.

The role of XBRL: connecting levels.

Research agenda.

Some references

The idea of a continuum

Business factsBusiness facts

Business factsBusiness facts

Business facts

Firm Stakeholders

Public policy making

Decision making

The idea of a continuum

Intensive and enhanced internal and external auditing (Vasarhelyi et al., 2004).

Approaching continuous monitoring.

Enabling better…public policy making

decision making process by firm and stakeholders (Cohen, 2009).

Limits to corporate disclosure

Competitive advantage or industry concentration (Burks et al., 2015).

Personal data protection / other legal-ethical constraints.

But also…

Bad news (Miller and Skinner, 2015).

Our focus: semantic / technical barriers.

Effectiveness of targeted transparency

User-centeredFocus on needs, interests, and abilities of information users

SustainableGain in use, accuracy, and scope over time

Non-rival consumptionLess-than-optimal amounts / dissemination of information,

Information asymmetry: adverse selectionThe Market for Lemons (Akerlof 1970).

Information asymmetry: moral hazardOne party cannot observe the other party: Principal-Agent

Full disclosure. The perils and Promise of Transparency

A. Fung, M. Graham and D. Weil, 2008

Major imperfections of Real-World Information

Targeted transparency policy

Discloser’s

mandated

information

User’s

perception &

calculation

Discloser’s

perception &

calculation

User’s

actions /

behavior

Discloser's

responses /

behavior

Discloser’s

voluntary

information

User’s

perception &

calculation

Discloser’s

perception &

calculation

User’s

actions /

behavior

Discloser's

responses /

behavior

Targeted Transparency Action Cycle. A. Fung, M. Graham and D. Weil, 2008

Presentation toward Syntax

From paper-based human reading to web-based computerized analysis

Semantics

Presentation Syntax

Business factsBusiness facts

Business factsBusiness facts

Business facts

Firm

Stakeholders

Public policy making

Decision making

Departures from the continuum

Report

Reporting rule

Repository

Regulator / Supervisor

Departures from the continuum,across industries and jurisdictions

Departures from the continuum

Regulations requiring aggregated periodic reports.

Public repositories of standardized reports.

Supervisory bodies analyzing `on behalf of…´

Agenda

Continuum: several layers of interoperability.

The role of XBRL: connecting levels.

Research agenda.

Some references

XBRL, some facts we all know…?

Well known and broadly used?

Supported by regulatory bodies all over the world.

Internet, plenty of XBRL reports… ready to be used?

template-based principle-based

compulsory items

voluntary items -

+ -

-

GAAP type

Dis

clo

sure

typ

e

Source: Valentinetti, Rea (2011)

template-based

principle-based

Standard/ compulsory /

global

Proprietary / voluntary / sectorial

GAAP type

Dis

clo

sure

typ

e

non-active push

active push

Source: Valentinetti, Flores (2011)

Issuer i(t), i(t+1)

FSA

FS A

FSCompulsory items

Repositoryi(t), j(t), k(t)…i(t+1), j(t+1),

k(t+1)…

analysis

AIi(t) ≈ AIj(t)

AIs

AIi(t) ≈ AIi(t+1)

tool

AI*i(t) ≈ AI*j(t)

AI*s

Issuer i(t), i(t+1)

FSA

FS A

FSCompulsory items

Repositoryi(t), j(t), k(t)…i(t+1), j(t+1),

k(t+1)…

analysis

AIi(t) ≈ AIj(t)

AIs

AIi(t) ≈ AIi(t+1)

AI*i(t+1) ≈ AI*i(t+1)

tooltool

AI**s

AI*s AI**i(t) ≈ AI**i(t+1)

Issuer i(t), i(t+1)

FSA

FS A

FSCompulsory items

Repositoryi(t), j(t), k(t)…i(t+1), j(t+1),

k(t+1)…

analysis

AIi(t) ≈ AIj(t)

AIs

AIi(t) ≈ AIi(t+1)

FSVoluntary items

AI*i(t) ≈ AI*j(t)

AI*i(t+1) ≈ AI*i(t+1)

Issuer i(t), i(t+1)

FSA

FS A

FSCompulsory items

Repositoryi(t), j(t), k(t)…i(t+1), j(t+1),

k(t+1)…

tool

AIi(t) ≈ AIj(t)

AIs

AIi(t) ≈ AIi(t+1)

Standard taxonomy

tool

AI*i(t) ≈ AI*j(t)

AI*s

Issuer i(t), i(t+1)

FSA

FS A

FSCompulsory items

Repositoryi(t), j(t), k(t)…i(t+1), j(t+1),

k(t+1)…

tool

AIi(t) ≈ AIj(t)

AIs

AIi(t) ≈ AIi(t+1)

Standard taxonomy

AI*i(t+1) ≈ AI*i(t+1)

tooltool

AI**s

AI*s AI**i(t) ≈ AI**i(t+1)

Issuer i(t), i(t+1)

FSA

FS A

FSCompulsory items

Repositoryi(t), j(t), k(t)…i(t+1), j(t+1),

k(t+1)…

tool

AIi(t) ≈ AIj(t)

AIs

AIi(t) ≈ AIi(t+1)

FSVoluntary items

Standard taxonomy

Extended taxonomy

AI*i(t) ≈ AI*j(t)

AI*i(t+1) ≈ AI*i(t+1)

compulsory items

voluntary items

Dis

clo

sure

typ

e

Active pushNon-Active

Push

XBRL implementation

tool

tool

tooltool

tool

Agenda

Continuum: several layers of interoperability.

The role of XBRL: connecting levels.

Research agenda.

Some references

The XBRL `glue´ effect, some evidences

XBRL benefits by junctionsList of relevant junctions:

Research gap / methodological issues

XBRL benefits are partial and hardly generalizable.

In each layer it is not clear the methodological toolkit to measure success.

Research agenda – general

Properly identify the junctions towards a continuum . Are they common for all reporting ecosystems? How to avoid its drawbacks?

Identify the toolkit for each junction.

Prepare a pilot in the context of European Single Digital Market.

Toolkit

31

Junction Method

1. From Business Fact to Reports ?

2. From reports to repositories Delphi-type study

3. Repositories to stakeholders ?

4. Stakeholders to analysis ?

5. Beyond industry and region ?

Research agenda – pilot

Context (Eurofiling, where XBRL is more mature…)

Junction category (2 of the proposed typology)

Methods (interviews, interaction, consensus)

Horizon of potential answers to be linked to the European Interoperability Framework.

Timeline: next XBRL international event?

Questions?