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Procedia - Social and Behavioral Sciences 145 (2014) 308 – 315

ICGSM 2014

Enhancing corporate governance via XBRL: preparers’ perception

on compatibility expectation
Erlane K Ghani, Jamaliah Said and Kamaruzzaman Muhammad*
Accounting Research Institute & Faculty of Accountancy,Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia

Abstract

This study examines the perception of financial reporting preparers on a financial reporting mechanism via digital known as
Extensible Business Reporting Language (XBRL) in Malaysia. Using questionnaire survey on 150 Malaysian accountants as
representative of financial reporting preparers of various organisations in Malaysia, this study found that most preparers
perceived that XBRL is compatible and subsequently benefits the organisations for decision-making purpose. The findings in this
study shed lights to regulators on the need to provide more awareness and knowledge to preparers before XBRL could come into
full adoption.

Elsevier
© 2014 The Ltd. This
Authors. is an open
Published access Ltd.
by Elsevier article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Peer-review under responsibility of the Accounting Research Institute, Universiti Teknologi MARA.
Peer-review under responsibility of the Accounting Research Institute, Universiti Teknologi MARA.
Keywords:Financial reporting preparers, compatibility expectation, XBRL, Perception, Malaysia

1. Introduction

The business reporting language known as Extensible Business Reporting Language (XBRL) has started to gain its
position in the financial reporting chain as financial regulators and advocates trumpeted this tool as bringing huge
benefits to all relevant parties (Kernan, 2008). XBRL was initially known as Extensible Financial Reporting Mark-up
Language (XFRML) and later changed to XBRL due to the realisation that corporate reporting encompasses a broad
range of reports which includes financial reporting (Wu and Vasarhelyi, 2004). XBRL provides the financial
community a standard based method to prepare and publish corporate reports in a variety of formats depending on the
software used to download XBRL documents for decision-making purposes. It comes from the mark-up language
family which is similar to HTML that uses XML schemas to define concepts which can be viewed as entities in a

* Corresponding author. E-mail address:[email protected]

1877-0428 © 2014 Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/3.0/).
Peer-review under responsibility of the Accounting Research Institute, Universiti Teknologi MARA.
doi:10.1016/j.sbspro.2014.06.039
 Erlane K. Ghani et al. / Procedia - Social and Behavioral Sciences 145 (2014) 308 – 315 309

relational database sense and in specifying its taxonomy. An XBRL document can be accessed with XBRL friendly
software (XBRL, 2007). How the information is presented depends on the software used to access the document.
Microsoft Excel software for example, allows users to select relevant information items from XBRL-based documents
and subsequently copy and paste the relevant information items to Excel and perform various analytical tasks without
the need to re-key the information items (Debreceny and Gray, 2001).
Throughout the world, companies have started to adopt XBRL-based financial report and Malaysia is not an
exception to such practices. The Malaysian regulators have also seen the importance of adopting XBRL in improving
financial reporting among companies as it is seen to achieve the objectives of accounting framework. Due to such
awareness, the Companies Commission of Malaysia (SSM) proposed a full adoption of XBRL on companies following
the completion of a five-year XBRL initiative. The initiative was introduced by the Malaysia’s Registrar of Companies
developed under its Strategic Direction Plan II. SSM plans to implement XBRL-based financial reporting in phases
starting with listed companies, their subsidiaries and non listed companies followed by private listed companies
(Francis, 2012). SSM plans to kick-start the implementation of XBRL in 2014 which requires companies to fully adopt
XBRL with the intention to promote corporate governance among the companies. However, one could pose a question,
what is the preparers’ perception on XBRL and what would be their level of readiness in XBRL implementation.
Answering this question provides understanding and indication to regulators on the success implementation of XBRL in
2014. Therefore, using companies listed in the Bursa Malaysia as the sample study, this study examines preparers’
perception on XBRL focusing on compatibility expectation.
The remainder of this paper is structured as follows. The next section provides a review of relevant literature. Section
3 discusses the research objective and research question underpinning this study and section 4 outlines the research
design. The results are presented in section 5. A summary and conclusion are provided in the last section.

2. Literature Review

Examining users’ perception of a technology is one of the themes that have emerged in the information technology
literature. Studies that examined the users’ perception of a technology often used subjective measures since perception
has been argued to be an important determinant to decision in using a technology (Beach and Mitchell, 1978). The
reason to this argument is that users often require certain knowledge of the technology before deciding to rely on it
(Ghani, 2008). Several studies have examined users’ perception of a technology by adapting two contexts definition of
perception namely, perceived use of use and perceived usefulness of technology (Davis, 1989; Adams, Nelson and
Todd., 1992, Subramaniam, 1994; Taylor and Brownfield, 2002). Davis (1989, p.320) defined perceived ease of use as
“the degree to which a user believes that using a particular aid would reduce or be free of effort”. He further defined
perceived usefulness as “the degree a user believes that a particular aid would enhance his performance”. Adams et al.,
(1992) noted that using subjective measures often provide insights to system designers on understanding the factors that
influence users’ decision to accept or not to accept a technology.
Davis (1989) and Adams et al. (1992) proposed that users often have similar perceptions on the usefulness and ease
of use of technologies that share similar functions. The attribute to such proposal is that users often have similar
perceptions of different technologies in a similar setting due to these technologies provide similar functions and
therefore, would provide similar benefits (Adams et al., 1992). For example: Adams et al. (1995) examined users’
perceptions of two technologies namely, voice mail and electronic mail. They found that their perceptions viewed these
two technologies as somewhat similar. Such finding is understandable since both technologies provide similar
functions. The users’ perceptions however, may vary across time as the nature of a technology may change over time.
Little is known about users’ perceptions of the technologies involving reporting formats in a digital reporting
environment within the accounting discipline. Studies in the accounting discipline have often focused on the contents
and details of the contents in the financial reports leaving examination on the format to disseminate financial
information largely under-researched. Beattie and Pratt (2003) provide some evidences that users of financial reports
perceived the reporting formats in the digital reporting environment as ‘fairly useful’. Ghani (2008) extended Beattie
and Pratt’s study by examining three reporting formats namely, PDF, HTML and XBRL in her study. She found that
users generally found all reporting formats as ‘useful’ and user-friendly. However, her study was conducted in a New
Zealand setting. This study examines one financial reporting format by examining users’ perception of XBRL in a
Malaysian setting.
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3.Research Objective and Research Question

The objective of this study is to examine financial reporting preparers’ perception on the compatibility usage of
XBRL in Malaysia. This study attempts to examine the objective by the mean of questionnaire survey. This objective is
important because most studies that examine digital reporting format focuses on the information items that need to be
included, leaving out the importance on how the information items should be presented (Hard and Vanecek, 1991;
Ramarapu, Frolick, Wilkes and Wetherby, 1997; Hodge, 2001). Such scenario is even more apparent in the digital
reporting environment. The lack in examining perception of a technology such as digital reporting format is important
as it provides an issue to be resolved since perception influences acceptance and intention to use a technology (Beach
and Mitchell, 1978; Davis, 1989). Such study is necessary in providing a comprehensive view of the importance of
perceptions in the selection and usage of a technology, particularly in digital reporting format.
Such objective is examined because the way the information is presented should be given attention following the
argument by Bertin (1983). Bertin argued that the most appropriate format for a particular question is the one that
improve users’ performance. The way the information is presented makes some aspects of the information displayed
more apparent depending on the format. Furthermore, questions of different levels of complexity pertaining to
difference characteristics or relationships within the information are also displayed differently depending on the format
used. One format that is appropriate would enable the users to process information more accurately with less expense on
cognitive effort (Mackay, Barr and Kletke, 1992; Hodge, Kennedy and Maines, 2004; Ghani, 2008). Arguably, one
format cannot be said as a technology that can solve an issue, as certain formats can be used to achieve high
performance in one task but not necessarily in other tasks.
Studies have extensively researched the areas in the digital reporting environment over the past decade such as
Lymer and Tallberg (1997) and Hodge and Pronk (2006). These studies have examined various issues from factors
influencing public and private organisations to adopt digital reporting (Craven and Marston, 1999; Allam and Lymer,
2003). More recently, the digital reporting literature has expanded its scope to include format (Beattie and Pratt, 2001;
Hodge, 2001; Beattie and Pratt, 2003; Hodge et al., 2002; Hodge et al., 2004; Hodge and Pronk, 2006; Ghani, 2008).
However, apart from Ghani (2008), these studies have not extensively examined users’ perception of the digital
reporting format. Studies in the information systems literature found that users often share similar perceptions of
technologies having similar functions. Arguably, such findings may also apply to digital reporting format. Therefore,
the following research question is developed:
RQ: How do the preparers in Malaysia perceive XBRL in terms of its compatibility?

4. Research Design

4.1 Sample

Accountants who are attached with various organisations and industries in the private sector are selected as the
sample for the study. Such sample is chosen due to the vast experience and knowledge in the preparation of financial
statement and therefore they would likely be among the first to be expose to new technologies that could improve
decision-making and financial reporting. This study assumes that the accountants carry their profile as it is and the same
profile remains throughout their career during the data collection process.

4.2 Questionnaire design

A questionnaire is developed for the purpose of this study. The purpose of the questionnaire is to obtain response on
the questions related to preparers’ perception of compatibility expectation on XBRL. The questionnaire is divided into
three sections. Section A requests the respondents to provide their awareness on XBRL. Six questions were developed
in this section which include familiarity on XBRL, plans to gain more knowledge on XBRL, organisation’s plans to
adopt XBRL in the near future, understanding on XBRL, attendance in XBRL course or training and the type of XBRL
 Erlane K. Ghani et al. / Procedia - Social and Behavioral Sciences 145 (2014) 308 – 315 311

course or training attended if any. The respondents are requested to complete the questions in this section based on
multiple choice responses.
Section B requests the respondents to provide their opinion on their usage expectation upon using XBRL. Seven
questions were developed in this section. The questions include whether XBRL ic compatible with the organisation’s
current accounting systems, existing system infrastructure, difficulties in implementing XBRL due to inconsistent
taxonomy, incur high cost of XBRL software development, limited software tools and support to integrate XBRL,
problem of instability of XBRL specification and complexity of XBRL implementation. The respondents are requested
to complete this section based on 7-point scale of ‘1’ as strongly disagree and ‘7’ as strongly agree.
The last section, Section C requests the respondents to complete their demographic profile. The respondents are
requested to provide their demographic profile such as age, gender, member of professional body, educational
background and work experience.

4.3 Data collection

The data collection involves distribution of questionnaires to preparers of financial statements. The accountants
attached from various industries in the private sector were approached personally by the researchers via telephone or
email. Once the respondents provided their consent to participate in this study, a set of questionnaire with a self-
addressed envelope provided were sent to the respondents via snail mail. The respondents were requested to complete
and return the completed questionnaire within a period of three months. In total, 200 questionnaires were returned.
However, only 150 questionnaires were usable providing a successful response rate of 75 percent.

5. Results and Discussion

5.1 Demographic profile

This section presents the descriptive statistics of the demographic profile of the accountants who participated in this
study. Table 1 provides the demographic statistics of the respondents in this study. Panel A shows that the respondents
of this study consists of 71 males and 79 females. Most of the respondents are between 31 to 40 years of age
represented by 47 percent, followed by 20 to 30 years of age and 41 and 50 years of age as shown in Panel B. Sixty two
percent of the respondents are degree holders with just 3 respondents having a PhD. This is expected since these
respondents are attached to the private sector. Panel D of Table 1 shows that slightly less than half of the respondents
have 5 to 10 years working experience (44 percent) and 23 percent of the respondents have 11 to 15 years of working
experience. Twenty two percent of the respondents have more than 15 years working experience.

Table 1. Descriptive statistics

Panel A: Gender
Gender Frequency Percent
Male 71 47
Female 79 53
Total 150 100

Panel B: Age
Age Frequency Percent
20-30 42 28
31-40 71 47
41-50 34 23
Above 50 3 2
Total 150 100
312 Erlane K. Ghani et al. / Procedia - Social and Behavioral Sciences 145 (2014) 308 – 315

Panel C: Education background

Education Frequency Percent
Degree 93 62
Postgraduate Diploma 16 11
Masters 26 17
PhD 3 2
Others 12 8
Total 150 100

Panel D: Working experience

Education Frequency Percent
Less than 5 years 16 11
5-10 years 67 44
11-15 years 35 23
16-20 years 22 15
More than 20 years 10 7
Total 150 100

Table 2 presents the results of the respondents’ awareness and preference of XBRL. Panel A of Table 2 show the
results of that only 37 percent of the respondents are aware that SSM plans to implement XBRL-based financial
reporting in phases starting with listed companies in 2014. More than half of the respondents are not aware of SSM’s
plans to implement XBRL in Malaysia. This is an alarming signal to SSM and actions need to be taken in ensuring the
success implementation and adoption of XBRL among listed companies in Malaysia.
Panel B of Table 2 shows the descriptive statistics of the respondents’ awareness of XBRL in their organisation. The
results show more than half of the respondents are not sure whether their organisation is going to adopt XBRL (63
percent). Twenty percent of the respondents noted that their organisation is going to adopt XBRL. Such results support
the descriptive statistics in Panel A, Table 2 on the awareness of the respondents on the SSM’s plans to implement
XBRL in 2014. When asked on the respondents’ preferred format in financial reporting in the digital environment,
slightly more than half respondents prefer PDF (55 percent), followed by HTML (29 percent) and XBRL (16 percent).
This result indicates that the respondents are not keen to adopt XBRL, again an alarming signal to SSM on their plans to
adopt XBRL in 2014, which is thought would be successful.

Table 2: XBRL implementation awareness and preference

Panel A: Awareness of XBRL implementation in malaysia

Awareness Frequency Percent
Yes 55 37
No 95 63
Total 150 100

Panel B: Awareness of XBRL implementation in organisation

Awareness Frequency Percent
Yes 30 20
No 30 20
Unsure 90 60
Total 150 100
 Erlane K. Ghani et al. / Procedia - Social and Behavioral Sciences 145 (2014) 308 – 315 313

Panel C: Preference of XBRL

Preference Frequency Percent
PDF 82 55
HTML 44 29
XBRL 24 16
Total 150 100

5.2 Compatibility Expectation of XBRL

This section presents the respondents’ mean score of the compatibility expectation of XBRL. There are 7 statements
related to compatibility expectation of this technology. Table 3 presents the result based on the questionnaire in section
A which requested the respondents to provide opinion for each statement using a 7-point scale of ‘1’ as strongly
disagree and ‘7’ as strongly agree.

Table 3. Compatibility expectation of XBRL

No Statement Mean Standard Deviati

1 XBRL is compatible with your organisation’s current accounting systems 4.480 1.32177
2 XBRL is compatible with your organisation’s existing system infrastructure 4.400 1.31041
3 Your organisation has difficulty in implementing XBRL due to 3.950 0.82112
inconsistent taxonomy
4 Your organisation incur high cost of XBRL software development 4.300 0.85870
5 Your organisation has limited software tools and support to integrate XBRL 4.180 0.89194
6 Your organisation has problem of instability of XBRL specification 4.220 0.88283
7 Your organisation has complexity of XBRL implementation 4.330 0.96457

The results show that all the respondents agree that XBRL are compatible to the existing system in the organisation
of the financial statement preparers. Among the 7 statements related to compatibility expectation, most respondents
perceived that XBRL is compatible with their organisation’s current accounting systems where the highest mean score
of 4.480 was given. This is followed by respondents’ opinion that XBRL is compatible with their organisation’s
existing system infrastructure. Such findings provide some indications that the organisations are ready to implement
XBRL since their existing accounting systems and infrastructure could be integrated with XBRL. However, such
findings seem perplexing because even though the respondents perceived that XBRL is compatible to the organisation’s
current accounting system and infrastructure, they are not keen to adopt XBRL.
The results, however show that despite that the respondents perceived that XBRL is compatible with the
organisation’s existing accounting system and infrastructure, their organisation may face some complexity in the
implementation phases (mean score: 4.330) and also be incurring high cost in developing the XBRL (mean score:
4.3000). The respondents’ opinions were somewhat mixed on the difficulty in implementing XBRL due to inconsistent
taxonomy (mean score: 3.950). Such findings provide some indication that the respondents may be aware of the
existence of standardised taxonomy throughout the world and are unlikely to worry about the lack of standardised
taxonomy.

5.3 Additional analyses

This study provides further analysis examining whether there is significant difference between the respondents’
preferred digital format and their perceived compatibility expectation of XBRL. Table 4 presents the results of ANOVA
analysis. The results show that the mean score for the respondents preferring XBRL is the highest being 4.6156 for
perceived compatibility expectation. This is followed by respondents that prefer PDF provide mean score of 4.2125 and
314 Erlane K. Ghani et al. / Procedia - Social and Behavioral Sciences 145 (2014) 308 – 315

respondents preferring HTML provide mean score of 4.1717. Such findings seem logical since users would often prefer
an object that would provide them benefits upon relying on the object (Beach and Mitchell, 1978; Davis, 1989).

Table 4. Preferred format on perceived compatibility expectation

Panel A: Digital format

Digital format N Mean Std. Deviation
PDF 82 4.2125 0.64024
HTML 44 4.1717 0.43743
XBRL 24 4.6156 0.49895

Panel B: ANOVA analysis

df Mean Square F Sig.
Between Groups 2 1.185 3.682 0.029
Within Groups 147 0.322

This study also examined whether the respondents’ plan to adopt XBRL has any link to their preferred compatibility
expectation. ANOVA analysis was used and the results are shown in Table 5. Basing on panel A, Table 5, the results
show that the respondents that are sure to adopt XBRL have the highest perceived compatibility expectation with a
mean score of 4.3780 but such score is not significantly higher than those respondents who are not willing to adopt
XBRL (mean score: 4.0635). Those respondents who are not sure whether they are going to adopt XBRL or not in
future provide a mean score of 4.2948 on their perceived compatibility expectation. Such results indicate that such
respondents may have plans to adopt XBRL.

Table 5. Plan to adopt XBRL and perceived compatibility expectation

Panel A: Plan to adopt XBRL

Plan to Adopt XBR N Mean Std. Deviation

Yes 30 4.3780 0.62714

No 30 4.0635 0.42675
Not sure 90 4.2948 0.60427

Panel B: ANOVA analysis

df Mean Square F Sig.
Between 2 0.560 1.674 0.193
Groups
Within Group 147 0.335

6. Conclusion

This study examines the perception of financial reporting preparers on XBRL in Malaysia. Specifically, this study
examines the financial reporting preparers’ compatibility expectation of XBRL for their organisations. The result shows
that all the respondents agree that XBRL is compatible with the organisations’ accounting information system and
infrastructure. Although the respondents viewed that they may be facing some difficulty in implementing XBRL and it
would involve a huge amount of expenditure to implement XBRL, they believed that XBRL is useful in promoting
corporate governance. Such results are consistent with the previous findings that XBRL does improve efficiency of
organisations’ performance (Debreceny and Gray, 2001; Ghani, 2008).
 Erlane K. Ghani et al. / Procedia - Social and Behavioral Sciences 145 (2014) 308 – 315 315

This study is not without limitations. First is the number of respondents involved in this study. There were only 150
respondents which may not be sufficient to provide a more robust result. Having a larger sample may improve the
validity of the results. Secondly, the awareness of the respondents on XBRL may be quite vague which might impair the
understanding of what XBRL is among the respondents. Perhaps, given some more time, the understanding of XBRL
among the preparers of financial statement in Malaysia could be enhanced before embarking on a future study related to
usage expectation of XBRL. The findings in this study shed lights to regulators on the need to provide more awareness
and knowledge to preparers before XBRL comes into full adoption in achieving corporate governance.

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