Do Managers Use Extension Elements Strategically in the SEC's Tagged Data for Financial Statements? Evidence from XBRL Complexity

What is it about?

The findings of this paper suggest that managers use extension elements strategically to increase XBRL complexity and obfuscate XBRL-tagged financial information. Our study makes contributions to the accounting literature in three ways. First, we extend the strategic reporting literature by demonstrating that firms use extension elements strategically to increase the complexity of XBRL-tagged data. Second, this paper contributes to a recent debate in XBRL studies about whether managers use extension elements tactically. We provide initial evidence that they do. Finally, both regulators and practitioners have expressed concerns about the overuse of extension elements and its consequences (e.g., less readability, less comparability, and lower reporting quality). Our study offers regulators the useful insight that the use of unnecessary extensions may be affected by firms' reporting strategies.

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