New Article: Markelevich et al, The Israeli XBRL Adoption Experience

Markelevich, Ariel, Lewis Shaw, and Hagit Weihs. “The Israeli XBRL Adoption Experience.” Accounting Perspectives 14.2 (2015): 117-33.

 

URL: http://dx.doi.org/10.1111/1911-3838.12044

 

Abstract

eXtensible Business Reporting Language (XBRL) is a language for the electronic communication of business and financial data which is revolutionizing business reporting around the world. It is a tool to bridge potential language barriers and unify financial reporting. This has appeal to foreign investors, among others, who can rely on information in XBRL-tagged financial reports to make investment decisions without having to translate financial statements from local language. In 2008, Israel required most public companies to adopt International Financial Reporting Standards (IFRS) for financial reporting and to use XBRL-tagged reporting format, as part of an aggressive effort to make its capital markets more transparent and attractive for foreign investors. In this paper, we study all Israeli public companies and analyze the accuracy and reliability of their XBRL-tagged financial statements that are available on MAGNA, the Israel Securities Authority’s electronic system. We describe the process by which the XBRL-based data were collected and reported. We document, categorize, and analyze deficiencies in the XBRL-tagged filings, and inconsistencies between them and the Hebrew-based annual reports. We observe pervasive data entry errors resulting in inaccurate XBRL-generated financial reports, which went undetected for over one year. Further, first year XBRL reporting (in conjunction with IFRS adoption) did not increase foreign investment in the Israeli capital markets. This analysis allows us to better understand the benefits and challenges of the adoption of XBRL.

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