From Print to Practice : XBRL Extension Use and Analyst Forecast Properties

Regulators are not always able to anticipate how mandates will translate to financial reporting practice, particularly when managers are able to exercise reporting discretion. When XBRL, the eXtensible Business Reporting Language, was mandated by the SEC, financial analysts were among the intended beneficiaries. While there is some evidence that analysts as a whole may have benefited from XBRL, firms have discretion in the categorization of XBRL elements in the form of company-specific extensions. The SEC has recently expressed concern over managers' perceived overuse of these custom extensions. We use these extensions to create a measure of the abnormal company-specific extension use in a firm's XBRL reporting. We then show that this abnormal company-specific extension use is associated with greater analyst following, greater analyst dispersion, and decreased forecast accuracy. These results are consistent with the proposition that, while analysts apparently find XBRL data to be useful, the usefulness of the data can be compromised by managers' categorization choices