Starting in 2009 the eXtensible Business Reporting Language (XBRL) standard was mandated for financial statements by the SEC. The XBRL standard was intended to encourage less-sophisticated trader disclosure processing; however, previous literature has conjectured that the standard primarily aided more-sophisticated traders’ disclosure processing. I reexamine the effect of XBRL on more- and less-sophisticated trader disclosure processing by testing whether XBRL influenced their information... Show moreStarting in 2009 the eXtensible Business Reporting Language (XBRL) standard was mandated for financial statements by the SEC. The XBRL standard was intended to encourage less-sophisticated trader disclosure processing; however, previous literature has conjectured that the standard primarily aided more-sophisticated traders’ disclosure processing. I reexamine the effect of XBRL on more- and less-sophisticated trader disclosure processing by testing whether XBRL influenced their information acquisition and testing whether the proportional relationship between information acquisition and market activity is different for more- and less-sophisticated traders. I find the staggered implementation of XBRL is associated with a 49% (26%) increase in less (more) sophisticated trader information acquisition. Next, I find the proportional relationship between information acquisition and market activity is greater for less-sophisticated traders when compared to more-sophisticated traders. Specifically, I find information acquisition for less-sophisticated traders has a greater proportional relationship with abnormal price movement, abnormal trading volume, and abnormal bid-ask spreads. Together these findings suggest that XBRL did not provide a disproportionate information advantage to more-sophisticated traders, but rather benefited less-sophisticated traders by decreasing their information acquisition costs. Show less
