Improving corporate disclosure through XBRL. An evidence-based taxonomy structure for integrated reporting
| Date | 12 March 2018 |
| Pages | 338-366 |
| DOI | https://doi.org/10.1108/JIC-03-2016-0030 |
| Published date | 12 March 2018 |
| Author | Matteo La Torre,Diego Valentinetti,John Dumay,Michele Antonio Rea |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
Improving corporate disclosure
through XBRL
An evidence-based taxonomy structure for
integrated reporting
Matteo La Torre and Diego Valentinetti
Department of Economic Studies, University “G. d’Annunzio”of Chieti-Pescara,
Pescara, Italy
John Dumay
Department of Accounting and Corporate Governance, Macquarie University,
Sydney, Australia, and
Michele Antonio Rea
Department of Economic Studies, University “G. d’Annunzio”of Chieti-Pescara,
Pescara, Italy
Abstract
Purpose –The purpose of this paper is to examine the potential for eXtensible Business Reporting Language
(XBRL) to go beyond static reporting. A taxonomy structure of information is developed for providing a
knowledge base and insights for an XBRL taxonomy for integrated reporting (IR).
Design/methodology/approach –Design Science (DS) research, as a pragmatic exploratory research
approach,is embraced to create a new “artefact”andthematic content analysisis used to analyse IR in practice.
Findings –Using XBRL for IR allows a shift from static and periodic reporting to more relevant and
dynamic corporate disclosure for stakeholders, who can navigate and retrieve customised disclosure
information according to their interest by exploiting the multidimensionality of IR and overcomesome of its
criticisms. The bi-dimensional taxonomy structure the authors’present allows users to navigate disclosure
from two different perspectives (content elements (CE) and capitals), display specific themes of interest, and
drill down to more detailed information. Because of its evidence-based natureand levels of disaggregation, it
provides flexibility to preparers and users of information. Additionally, the findings demonstrate the need
to codify sector-specific information for the CE, so that to direct the efforts toward the development of
sector-specific taxonomy extensions in developing an XBRL taxonomy for IR.
Research limitations/implications –The limitations of DS research are, first, the artefact design and,
second, its effects in practice. The first limitation stems from the social actors’perspective taken into account
to develop the taxonomy structure, which derives from the analysis of the reporting practices rather than a
pluralistic approach and dialogic engagement. The second limitation relates to the XBRL taxonomy
development process because, since the study is limited to the “design”phase being codification and
structuring the knowledge base for an XBRL taxonomy, there is a need to develop a taxonomy in XBRL and
then apply it in practice to empirically demonstrate the potential and benefits of XBRL in the IR context.
Practical implications –The taxonomy structure is targeted at entities interested in designing an XBRL
taxonomy for IR. This is a call for academics and practitioners to explore the potential of technology to
improve corporate disclosure and open up new projections for resurging themes on intellectual capital (IC)
reporting with prospects for IC “fourth-stage”research focused on IC disclosure.
Originality/value –This is an interdisciplinary research employing the DS approach, which is rooted in
information systems research. It is the first academic study providing pragmatic results for using XBRL in
the context of IC and IR.
Keywords XBRL, Design Science, Integrated reporting, Corporate disclosure,
Computer-assisted content analysis, Intellectual capital disclosure
Paper type Research paper
1. Introduction and background
Integrated reporting (IR) is the most recent initiative aimed at seeking to improve corporate
reporting. According to the International Integrated Reporting Council (IIRC), IR should
provide, in a single document, a comprehensive representation of an organisation’s
Journal of Intellectual Capital
Vol. 19 No. 2, 2018
pp. 338-366
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-03-2016-0030
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
338
JIC
19,2
performance and the wide-ranging factors that affect the business’s ability to create
value over time (IIRC, 2013a). Thus, an integrated report should provide a multifaceted
corporate report that includes financial and non-financial information.
Debate as to the ability of corporate reporting to be holistic, comprehensive, and
multifaceted is not new in accounting and intellectual capital (IC) research. For example,
Yongvanich and Guthrie (2006, p. 309) propose an “extended performance reporting
framework”by demonstrating that IC, the Balanced Scorecard, and social and
environmental reporting are complementary and can be integ rated into a single
framework to “empower stakeholders and facilitate change in the way organizations
conduct their activities.”Similarly, IR’s integrated approach flows from earlier concepts
such as “Triple-bottom-line”reporting, “One Report”(Eccles and Krzus, 2010b), and the
Global Reporting Initiative (2013a).
Beattie andSmith (2013) highlight that the emergenceof IR refocuses the debate on the role
of IC and value creation in narrative reporting. IR and IC reporting have a strict relationship,
since both aim at explaining –albeit from differentperspectives –the value-creating potential
of a firm not uncovered by financial information alone. Dumay (2016, p. 175) explains this
relationship as follows:
When you take away the physical capitals of financial, manufactured and natural capital, the
remaining three intangible capitals broadly align with IC’s three capitals: human capital with
human capital; soc ial and relational capital with r elational capital; and IC with s tructural capital.
This has ushered in a n ew era of hope for the IC r eporting faithful t hat IC reporting is fi rmly
back on the agenda of companies, especially large listed companies, which are the target of the
IIRC and oIR W.
Consequently, Dumay (2016), in his critical reflections on the future of IC and IR,
highlights a “newfound resurging interest in IC reporting, based on the current push for
integrated repor ting, which arguab ly contains IC infor mation targeted at in vestors.”
However, by addressing why “many academics continue to ascribe to reporting models
that receive little or no support in practice”, he argues the need to shift away from
reporting to more relevant disclosure by focusing on disclosing information that “‘was
previously secret or unknown’, so that all stakeholders understand how an organisation
takes into consideration ethical, social and environmental impacts”(Dumay, 2016, pp. 171,
168). Even though corporate disclosure and reporting are usually used synonymously,
corporate disclosure has a broad meaning and goes beyond the boundaries of reporting.
As Holland (2005, pp. 249, 264) argues, disclosure emphasises the dynamic elements of
“interaction and learning”between firm and market, and the “choice of disclosure
channel”,a“private information agenda”,“knowledge intensive intangibles, stories,
benchmarking, feedback, learning, outcomes, response and many other elements”aimed
at dealing with information asymmetry.
This renewed and resurgent interest in making IC externally visible suggests a new
approach is required. As Dumay (2016, pp. 163, 164) demonstrates, listed firms have lost
interest in IC reporting with no known recent examples of standalone IC reports, with IC
disclosures instead usually contained in other corporate communications such as press
releases and electronic communications. This suggests a need to go beyond IC reporting
(Edvinsson, 2013) by concentrating on discovering IC disclosure, shifting from a static and
periodic reporting toward dynamic and relevant disclosure for stakeholders.
Using technology can facilitate such a shift (Dumay, 2016). Information and
communication technologies have risen to the fore in the so-called digital reporting era,
changing the ways in which companies relate to their stakeholders (Ghani et al., 2009;
Hoffman and Mora Rodríguez, 2013). Beattie and Pratt (2003, p. 155) conclude that the
potential benefits of web-based business reporting derive from the “different kinds of
additional information that could be provided electronically”,“the usefulness of different
339
Improving
corporate
disclosure
through XBRL
To continue reading
Request your trial