| Summary: | 博士 === 國立東華大學 === 企業管理學系 === 107 === This study explores from two perspectives whether enhanced the comparability of financial statement information can mitigate agency problem in the context of mandatory adoption of XBRL (eXtensible Business Reporting Language) which SEC began to implement in 2009. XBRL provides a standard language for reporting financial information. XBRL is a type of XML (extensible markup language), and uses tags to identify each piece of financial data, which reduces the cost of information processing and increase the efficiency of data processing. XBRL makes it easier to compare and analyze data between enterprises.
The first part of this paper studies the impact of mandatory adoption of XBRL on the internal capital market efficiency of American diversified companies. Empirical results show that mandatory adoption of XBRL is associated with improvement in internal capital market efficiency. Specifically, increased efficiency of internal capital market is more obvious in companies with higher agency problems. In addition, we find that internal capital market efficiency and negative excess value are related during XBRL. After the mandatory adoption of XBRL, it is easier for investors to detect the inefficiency of the company's internal capital market and then give negative evaluation, which means that the improved efficiency of the internal capital market is due to the monitoring benefits of XBRL.
In the past three decades, the CEO’s compensation has increased greatly, while the abnormally high compensation reflects the failure of corporate governance. Thus, the second part of this paper discusses the impact of mandatory adoption of XBRL on CEO excess compensation. Our results indicate that mandatory adoption of XBRL is negatively associated with CEO excess compensation. Further, reduction of CEO excess compensation is more significant for companies with higher agency problems.
The overall results suggest that the internal capital market is more efficient and CEO excess salary is significantly reduced during XBRL. After the mandatory adoption of XBRL, the comparability of financial statement information is enhanced, the investor's information environment is improved, and then the agency problem between managers and shareholder is reduced.
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