Executive Team Information System and Financial Reporting Competencies, and Voluntary Adoption of XBRL Reporting

The issue of determinants of voluntary XBRL adoption has drawn considerable attention from the academic community around the world. Specifically, higher profitability and stronger corporate governance have been found to be significant factors associated with voluntary XBRL adoption in the U.S. We focus on the characteristics of the executive team (CEO and CFO) to investigate whether they are associated with the voluntary adoption of XBRL technology beyond the effect of firm characteristics. We also evaluate whether these characteristics (financial and information system competencies) within the executive team affected the quality of the XBRL-tagged filings, such as the use of customized extensions, errors rates, and reporting lag. We find that higher levels of information systems (IS) competencies were positively associated with early adoption of XBRL but, surprisingly, we find that higher levels of financial expertise were negatively associated with early adoption of XBRL. We also find that for voluntary adopters the two areas of expertise are differentially associated with XBRL filing quality. IS competency is negatively associated with the excessive use of extension taxonomies, errors and warning in the instance document, whereas financial expertise is negatively associated with taxonomy errors and warnings. These results extend the literature on the influence of management on corporate decisions and can be used as a guide for investigating voluntary adoption of other financial reporting technologies, voluntary XBRL filings in other jurisdictions and other voluntary disclosures such as sustainability reporting and voluntary standardized business reporting in XBRL in jurisdictions where such reporting is not mandatory.