The impact of XBRL on real earnings management: unexpected consequences of the XBRL implementation in China

Songsheng Chen, Jun Guo, Qingqing Liu, Xiaoxiao Tong

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper, we investigate whether there is a change of real earnings management for firms facing pressures of the new technology implementation of eXtensible Business Reporting Language (XBRL). We find that real earnings management increases after the implementation of XBRL in China, especially under the dual regulation of XBRL policies from two regulators (China Securities Regulation Committee and Ministry of Finance). Given the long term detrimental effect of real earnings management on firm value, this could be unexpected consequences of XBRL technology in emerging market. Furthermore, state-owned enterprises and non-state-owned enterprises behave differently under the dual regulation of XBRL policies.

Original languageEnglish (US)
Pages (from-to)479-504
Number of pages26
JournalReview of Quantitative Finance and Accounting
Volume56
Issue number2
DOIs
StatePublished - Feb 2021

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting(all)
  • Finance

Keywords

  • Real earnings management
  • Risk aversion
  • Technology
  • XBRL

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