Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Tuesday, October 02, 2007

Another false dawn for XBRL?

We have heard it so frequently and the arguments are persuasive; financials that can be analysed automatically can realign relationships between companies and the markets. Faster, easier analysis allows more coverage, of more companies, giving more time for in depth research, more time on valuing intangibles and all the rest.

And yet, XBRL has never won the degree of acceptance that its proponents would like to see. And this despite its whole hearted adoption by some regulators – and especially the SEC, who have gone so far as to rename it interactive data. (And by the way, I wonder what my old friends at the eponymous company make of that?)

However, in recent days we have seen a number of pronouncements which may indicate progress.

First, we have seen the announcement of the completion of all necessary tagging for analysis of US GAAP. This milestone means that public companies can more easily tag their financials, and simplifies both automated financial reporting to the SEC, and the wider use of financial information by investors.

Added to this, the SEC announced the launch of the source code for analysing reports prepared under XBRL. This is very important as it will enhance the chances of analysts on both sell and buy sides, getting value from the work an issuer does in preparing its financial information in XBRL.

Next, the number of companies participating has doubled in recent months. OK, so its still less than 1% of US public companies, but as the news release points out, they are very large ones. Their combined market cap is over $2 trillion.

And finally, NYSE Euronext voted with its feet for XBRL, by filing its own 10Q in that format.
So lots of excitement in recent days. Will it however lead to a tide of voluntary filers? Probably not; after all FD’s are still implementing other changes, but it’s another small step in the right direction of more easily understood financials. And anything that enhances transparency gets my vote.


  • At 5:56 pm, Anonymous Anonymous said…

    Here are three common perceptions that may help FD's ascertain if XBRL is right for them.
    "Three common reasons for Not using XBRL: What CFOs should really know" here>>>>>

  • At 8:16 am, Blogger Mark Hynes said…

    Thanks Mr Schneider - I assume its is you. Your blog is terrific.
    My only concern is how widely the message is spreading. I went to 2 meetings last week. One with a group of FTSE 100 finance directors, and the second with a group of IRO's. Both said that they did not understand XBRL, and that they did not sincerely believe it would happen - at least not soon. Count me in as a convertee however.


Post a Comment

<< Home