Does XBRL offer investors predictive benefits? Research says yes
To us at XBRL International it’s clear that XBRL data enables better decision making and offers value to investors and users of all kinds. Supporting that assertion is a point-of-view post at XBRL US, in which Steven Huddart of the Smeal College of Business at Penn State University asks “Are XBRL data better at predicting future stock returns?”
The article covers research conducted by the Penn State team comparing XBRL data (as provided to the Securities and Exchange Commission) and normalised commercial data in predicting accounting anomalies, which investors can utilise to their advantage. They found significant discrepancies between the as-filed and the commercially processed data, particularly for firms that are smaller or are experiencing higher growth.
The researchers also found evidence that some institutional investors (mutual funds, hedge funds) are making trading decisions based on XBRL data. The post points out that XBRL data is more timely, more granular, and authoritative, and explains the advantages of XBRL data that sophisticated investors should consider. A noteworthy piece that clearly illustrates yet another benefit of structured XBRL data!
Read more here.