This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

SEC-Mandated XBRL Data At Risk Of Being Irrelevant To Investors And Analysts

NEW YORK, Jan. 22, 2013 /PRNewswire/ -- In 2009, the Securities and Exchange Commission mandated that public companies submit portions of annual (10-K) and quarterly (10-Q) reports—in a digitized format known as eXtensible Business Reporting Language (XBRL). The goal of this type of data was to provide more relevant, timely, and reliable "interactive" data to investors and analysts. The XBRL-formatted data is meant to allow users to manipulate and organize the financial information according to their own purposes faster, cheaper, and more easily than current alternatives.

(Logo: http://photos.prnewswire.com/prnh/20120905/NY68578LOGO)

But how useful and usable is the new data to analysts and investors? The authors, early proponents of interactive data, from Columbia Business School's Center for Excellence in Accounting and Security Analysis (CEASA) recently completed a review of the state of XBRL, with a focus on its usefulness and usability for security analysis. The study questions the reliability of the data, the simplicity and stability of the underlying taxonomy and architecture, as well as the lack of user tools that add value and are easily integrated into an investor's or analyst's existing work flow and tools. As a result, the researchers conclude that XBRL has promised more than it has delivered to date and is at risk of becoming obsolete for use by analysts and investors.

However, the authors recommend specific changes that could make the formatted data more useful to investors and analysts. First, the entire XBRL stakeholder community must reduce significantly the error rate and limit unnecessary "extensions" (company-specific data identifiers or "tags"). Steps that might achieve this include: greater regulatory oversight and enforcement, mandatory audits of the data and tags, or requirements around meeting the XBRL US organization's error and quality checks. Second, the entities that file the XBRL-formatted financial reports should focus their energy on improving the quality of their data, rather than on trying to destroy the SEC's XBRL regulation. Third, the ongoing development of XBRL technology should be taken over and run by technologists, rather than accountants and regulators. An interesting approach for this might include partnering with major business information system vendors (like IBM, Oracle, and SAP), the key web-based financial information suppliers (like Google and Yahoo), and possibly even the major data aggregators (Bloomberg, CapitalIQ, Factset, and Thomson Reuters) not only to ensure that the SEC's regulatory data can be used effectively by investors and analysts, but, more importantly, to help improve the XBRL technology and usability overall.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs