The British Accounting Review 45 (2013) 167–182

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The British Accounting Review

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Stakeholder engagement in internet financial reporting: Thediffusion of XBRL in the UK

Theresa Dunne a,*, Christine Helliar b, Andy Lymer c, Rania Mousa d

aUniversity of Dundee, School of Business, Dundee DD1 4HN, United KingdombUniversity of South Australia, AustraliacUniversity of Birmingham, United KingdomdUniversity of Evansville, USA

Keywords:XBRLFinancial reportingDiffusionInternet reportingStakeholder Engagement

* Corresponding author. Tel.: þ44 (0)1382 385174E-mail address: t.m.dunne@dundee.ac.uk (T. Dun

0890-8389/$ – see front matter � 2013 Elsevier Ltdhttp://dx.doi.org/10.1016/j.bar.2013.06.012

a b s t r a c t

Internet financial reporting is now widespread with most medium and large companies inthe developed world providing a wide variety of financial data online. However, much ofthis information mirrors the paper versions of financial reports, often with little attempt toenhance the decision usability of the data, providing a so called ‘first generation’ of onlinereporting (ICAEW, 2004). eXtensible Business Reporting Language (XBRL) has beendesigned to provide a ‘second generation’ of online reporting, specifically to enhance theusability of the data. Documents rendered in XBRL are digitally-enabled so that it is easierfor stakeholders to extract information directly into spreadsheets, or any other XBRL-enabled analysis software, without the need to re-key data thus providing significantimprovements in information flows and enhancing inter-company comparability.XBRL consortia have spent more than 15 years promulgating the use of this technologywithin the business and government communities. However, despite their efforts XBRL hasnot become widely diffused, there is little stakeholder engagement and very few organi-sations have voluntarily adopted XBRL in practice.The results of a questionnaire survey in the UK indicate that awareness of XBRL, andsecond generation reporting more generally, resides in key champions but there is littlediffusion outside this narrow set of stakeholders. Regulatory engagement seems to be theonly impetus for diffusion and better channels of communication within stakeholdernetworks, such as between regulators, preparers, users and the XBRL community areneeded. This paper suggests that currently the supply-push for XBRL is failing to produceeffective use of this technology in the UK. Greater regulatory commitment is now neededto create an impetus for XBRL such as creating tools and making publicly available,accessible, repositories of XBRL data. Unless this happens, diffusion will not occur, and thedemand-pull which is now needed will vanish and XBRL will fade and die.

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1. Introduction

Internet reporting is now awidespread phenomenon, used by the majority of public limited companies, private companiesand public sector entities, to distribute corporate financial information to awide variety of stakeholders (Allam& Lymer, 2003).After an initial burst of activity as businesses explored the potential uses of this technology (Debreceny & Gray, 1997;

; fax: þ44 (0)1382 388421.ne).

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Gowthorpe & Flynn, 1997), innovative activity in financial data provision has plateaued. While innovation continues in areassuch as the use of social media to improve the interaction between companies and their stakeholders (Unerman & Bennett,2004), improvements in the nature of financial information do not appear to be keeping pace (Rowbottom & Lymer, 2009a).

The online financial reporting process currently used by businesses in the UK currently is known as ‘first level digitalreporting’ (ICAEW, 2004) or ‘first generation digital reporting’ (Cobb, 2008). Reporting online in this way has enabled thedissemination of financial information to become faster and more cost-effective, but only a fraction of the potential of thistechnology has been achieved (Lymer, Debreceny, Gray, & Rahman,1999), and the second generation of digital reporting (ICAEW,2004) should be more actively pursued to deliver on its potential (Debreceny & Gray, 2001; Locke, Lowe, & Lymer, 2010, p. 106).

The only second generation digital reporting technology being developed is Extensible Business Reporting Language(XBRL) (Cobb, 2008; Locke et al., 2010, p.106). XBRL enables preparers of financial reports to add fuller contextual informationto individual data items by ‘marking-up’ the content with ‘tags’ that XBRL-enabled software can read, allowing the automatedinterpretation and use of this data on an aggregated or item by item basis. Thus online reports move beyond simply pre-senting financial information (first generation) to disseminating data that can be used for awide variety of analytical purposes(Debreceny & Gray, 2001).

XBRL has been in development for more than 15 years and has achieved a number of significant successes in facilitating themore effective communication of financial information. For example, the SEC in the USA has mandated XBRL financial reportfiling (SEC, 2005; 2008) and in the UK HM Revenue and Customs has mandated XBRL corporate tax filing (Mousa, 2010) whileCompanies House accept XBRL corporate filings (Companies House, 2008). However, the majority of these developments havebeen focused at improving data for regulatory filing purposes. While this demonstrates the potential of this technology forimproving the distribution of financial data, these specific examples do not advance the more wide spread use of secondgeneration-enabled data as, apart from SEC filings, the repositories are only available to the regulatory body that receives them.

The development of XBRL as an open source global initiative is overseen by XBRL International Inc. (XII) a not-for-profitorganisation that produces free XBRL licensed resources, technological support and analytical tools. XII consists of a wideconsortium of stakeholders including professional accounting bodies, software houses, large listed companies and the Big4 accountancy firms. Under XII are national XBRL bodies, such as XBRL UK, with the task of engaging with their local com-munities to diffuse XBRL across organisations in their jurisdiction1 (Rodgers, 2003).

However, XII and XBRL UK appear to have stalled in the diffusion process. Knowledge of a new technology amongst keystakeholders is a critical and necessary step for effective technology diffusion (Rogers, 1995; Troshani & Lymer, 2010) butseveral small scale surveys undertaken in the UK, (e.g. Accounting Web, 2008) suggest that this has not occurred. Familiaritywith XBRL in companies is generally poor, and both preparers and users as stakeholders in the diffusion process have yet to bebeen convinced that their normal external reporting routines and practices can benefit from the adoption of XBRL.

The normal routines and practices of external financial reporting are often built in to management information systemswhich then produce outputs for many stakeholders including: investors and analysts; governments and regulators thatcollect data for taxation and regulatory filings; and management insiders who need to plan and monitor business perfor-mance. Such routines and practices have evolved over time, from regulatory requirements and from examining and copyingthe practices of other organisations as forms of coercive, mimetic or normative isomorphisms (DiMaggio & Powell, 1983).However, while the routines and practices of UK organisations have changed to encompass first generation digital reportingand social media, the only systematic use of XBRL in the UK is for regulatory purposes including corporation tax returns toHMRC and filings made to Companies House. However, neither of these two regulatory bodies make XBRL informationpublicly available and it is questionable whether further diffusionwill occur without some change in the level of engagementwith other stakeholders. If XBRL does not succeed the digitisation revolution in financial reporting will stall and the UK maybe left behind in the diffusion of ‘interactive data’.2

The diffusion of innovative technologies is frequently discussed in the information technology literature as “the process bywhich an innovation is communicated through certain channels over time among members of a social system” Rogers (1995:5). Although the notion of diffusion is less common in accounting circles, its use is becoming more prominent; for example,Mellett, Marriott andMacniven (2009) explored the diffusion of fixed asset accounting in the NHS inWales, Ax and Bjornenak(2005) examined the diffusion of the balanced scorecard in Norway, while Rajagopal (2002) and Bradford and Florin (2003)focused on the diffusion of Enterprise Resource Planning (ERP) systems within organisations. Within the innovation diffusionliterature stakeholder engagement and collaboration is frequently cited as an important component in the ultimate take-up ofa new technology (Hall & Martin, 2009).3 Successful diffusion may be evidenced by a change in emphasis from the technicalaspects of an innovation to a focus on the tools that increase functionality. Effective diffusion of XBRLmay therefore only occuronce businesses go beyond the technical details of XBRL and have the tools to create and use financial information in a real-time environment. This paper seeks to examine the diffusion of XBRL to key stakeholder groups in the UK.

1 See http://www.xbrl.org/uk for further details on the UK based organisation including details of membership. For more details on XII see http://www.xbrl.org.

2 ‘Interactive data’ is the term used by the SEC for its XBRL filings project to require all US listed companies to file quarterly and annual returns with it inXBRL format (http://xbrl.sec.gov). It uses this term to underline the nature of the difference in data use that its new requirements will produce rather thanfocussing on the technology (XBRL) that enables this.

3 The principles of stakeholder engagement are long established in the IT literature where the notion of participatory design with imagined and surrogateusers involved in the design process, is common (Mumford, 2003).

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The remainder of the paper is structured as follows. Section two provides further context and background to the researchand presents an overview of the digital reporting literature. In addition studies exploring the need for stakeholder engagementin the diffusion of innovations and emerging technologies are discussed. Section three outlines the research approachemployed in the study. Section four then outlines themain findings from the questionnaire survey before section five discussesthe key findings and concludes.

2. Background

The electronic delivery and dissemination of financial information – or digital reporting – has developed significantly overthe last fifteen years. The terms ‘Level 1’ or ‘first-level’ digital reporting (ICAEW, 2004: 7) and ‘first-generation digitalreporting’ (Cobb, 2008: 5) refer to internet reports that are generated by companies using PDF files or Hyper Text Mark-UpLanguage (HTML) software to display online versions of hardcopy financial statements on the Internet (Allam & Lymer, 2003).This electronic delivery has resulted in resources and emphasis being placed on all internet-related activities, where it wasprojected that within a decade a large number of companies would have jettisoned the use of hard-copy reports and relyexclusively on digital reporting (Cox, 2006). First generation digital reporting using PDFs has been used purely as anothermedium for disseminating published financial statements, rather than offering a new communication channel for interestedparties (Lymer et al., 1999). The use of HTML first-generation digital reporting has gone further by allowing many organi-sations to create a presence on the web beyond that facilitated by electronic paper representations produced by PDF doc-uments, and has provided stakeholders with company information in a more interactive environment than that previouslyfacilitated (Debreceny & Gray, 1997).

Much of the early academic and practitioner-based literature has focused on the use of the internet as a first-generationfinancial reporting medium; these studies are predominantly descriptive in their approach focussing on the use of theinternet in various regulatory environments such as the UK (Marston & Leow, 1998), the US (Debreceny & Gray, 1997;Gowthorpe & Flynn, 1997) and other European countries (Lymer & Tallberg, 1997). In addition, studies have also exploredthe links between the growth of the internet and particular company characteristics, as well as the dissemination of specialistnon-statutory material such as corporate social or environmental reports (Allam & Lymer, 2003; Marston, 2003; Marston &Leow, 1998; Rowbottom & Lymer, 2009a). This literature provides evidence of the proliferation of corporate websites for themajority of large listed companies in developed markets and it looks as if this trend is set to continue (ICAEW, 2004; Lymeret al., 1999; Marston, 2003).

Second-generation digital reporting takes the process a step further by standardising financial reporting using a digitalreporting framework that allows more automated analysis and interrogation of the underlying information across multipleplatforms. One particular technology, eXtensible Business Reporting Language (XBRL) has emerged as the leading technicalstandard to facilitate this process. Second-generation digital reporting is being developed to take internet reporting to a newlevel and, as described by the ICAEW (2004: 6), is:

4 Varfocusescompleup usinapproxi

.the means of making the underlying information available in a more effective form for analysis and interoperability withother systems, through standardisation of the framework withinwhich the information is stored, processed and presented forreporting purposes.

Traditional hardcopy financial reporting, as well as first generation PDF or HTML electronic corporate reporting ap-proaches, are frequently criticised because of their lack of electronic usability (Zarowin & Harding, 2000); once these doc-uments are created, it is difficult for users to extract and analyse the information these reports containwithout needing to re-enter the data. eXtensible Markup Language (XML) was developed as a more flexible data description language than HTMLallowing users greater access to data as andwhen required. XML is platform independentwhichmeans that the same languagecan be used on any hardware platform resulting in greater usability of the data. The creation of XBRL builds on the principlesand practices of XML specifically to deal with reporting financial information. As such it has the potential to herald a new erain reporting financial information – a second generation (ICAEW, 2004) – addressing criticisms of electronic usability(Connolly & Bosak, 1997). XBRL can be used to electronically describe (‘tag’) narrative information as well as numerical in-formation, such as the notes to the accounts and corporate governance disclosures, to extend electronic usability across thefull range of information contained in corporate reports.4

The potential benefits of XBRL have been widely cited in the professional press and focus primarily on the delivery of amore efficient, better controlled and detailed financial reporting process in a form that directly addresses constraints relatedto electronic usability that are ascribed to the first generation of internet reporting (Boritz & No, 2003; Carter, 2006; Cordery,Fowler, & Mustafa, 2010; Debreceny, Farewell, Piechocki, Felden, & Graning, 2010; ICAEW, 2004; SEC, 2005; Willis, 2005).Indeed, the SEC (2005) suggest that XBRL will free up resources from manual reporting tasks and add value to businesses;information is entered only once and the output can be rendered inmany different forms to accommodate varying user needs.

ious versions of the XBRL language exist; these relate to the differing reporting requirement of various GAAPs, reporting purposes and industry. The range of agreed tags that are available to any particular reporting preparer to describe its data can run into many thousands for larger and morex versions (such as national GAAPs). These should be adequate to cover much of the likely data (numeric and narrative) that they may wish to mark-g XBRL. To illustrate, the minimum number of tags list for a small UK company or charity to file its accounts in XBRL format with HMRC ismately 1000 different data items, which a user can then review in any analysis of those accounts.

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The ICAEW (2004) also notes that efficiency improvements can be made in the financial reporting and analysis processes forall stakeholders by eliminating the need to re-key financial information.

However, for XBRL to be effective widespread diffusion needs to occur, and a critical mass of stakeholders have to acceptXBRL as an integral element in the financial reporting process (Cordery et al. 2010; ICAEW, 2004; Locke et al., 2010, p. 106).Brancheau and Wetherbe describe four stages in the diffusion process: (i) knowledge; (ii) persuasion; (iii) decision; and (iv)implementation. Other authors describe the four stages of the diffusion process using terms such as discovery, translation,dissemination and change (Tucker & Parker, 2012), or primary, diffusion, condensing and saturation stages (Bjornenak, 1997).What is common is that many of the previous studies have focused on the fourth stage – implementation or change – whileignoring the other three. This study explores the earlier stages, before implementation, change or saturation occurs, becauseunless stakeholders first understand XBRL, an investigation into its implementation is premature.

The effective diffusion of IT innovation has been a concern of computer scientists for several decades (Brancheau &Wetherbe, 1990; Geroski, 2000) and accounting scholars have recently employed this perspective for exploringaccounting-related topics (Ax & Bjornenak, 2005; Bradford & Florin, 2003; Mellett et al., 2009; Rajagopal, 2002). Diffusiontheory provides a general explanation for the way that new ideas or innovations spread through a social system over time(Rogers, 1995). The process is characterised by uncertainty as innovations typically present potential adoptees with oppor-tunities to solve existing problems or the chance to gain a competitive advantage (Brancheau & Wetherbe, 1990; Geroski,2000). To cope with uncertainty, potential adoptees may copy and imitate other stakeholders such that they appear legiti-mate or so as not to lose competitive advantage (Abramson, 1991; Di Maggio & Powell, 1983; Malmi, 1999). Indeed, Bjornenak(1997) states that the first stakeholders involved in the diffusion process are the leaders who create the invention (in this caseXII and XBRL UK) and the first set of adopters, who he describes as the propagators. These two stakeholder groups, the leadersand propagators, start the relocation diffusion process which focuses on the movement of experts and the people withknowledge of the technology. This is followed by engagement with wider stakeholder groups who become involved in theexpansion phase of diffusion when the innovation is adopted by more and more interested parties and there is either acontagion or a hierarchical trickle down (Bjornenak, 1997).

The influence of stakeholders on organisational practices has long been established in the extant literature (Donaldson &Preston, 1995) and their role in fostering innovation and diffusing knowledge of new technology is well-documented (Hall &Martin, 2009). Chang and Jarvenpaa (2005) highlight the crucial role that stakeholder engagement plays in the diffusion andimplementation of technology like XBRL; they point towards the heterogeneity of stakeholder needs and the complexity ofdemands of the “differing actors” as potential stumbling blocks to widespread dissemination of the reporting tool (p. 366).Their analysis, using Greenwood and Hinings’ (1996) model of institutional change, focuses on the key players in XBRLdiffusion and argue that collaboration between these stakeholders is crucial in order to ensure the successful promulgation ofthe technology. These stakeholders can either be insiders, such as competitors or those in the same social networks, oroutsiders such as governments, regulators and consultancy/auditing firms (Abrahamson, 1991) where there are connectionsbetween stakeholders (Bjornanak, 1997). The extent of these contacts, or the informational field, and the exposure ofstakeholders may vary substantially, depending upon the types of institutional relationships that exist (Bjornanak, 1997).Outsiders may coerce or impel diffusion, but insiders need to be persuaded and, after some insiders as propagators havemadethe change, others mimic these leaders and a bandwagon effect then takes place5 (Abrahamson, 1991; Bjornanak, 1997; DiMaggio & Powell, 1983; Malmi, 1999). These actors in social networks therefore need to work together to ensure thatthere is successful diffusion across all stakeholder groups (Troshani & Lymer, 2010). However, in a UK context, although theintroduction of XBRL is gathering some momentum, it is at the behest of only one key stakeholder group, namely the UKgovernment, as a coercive outsider. XBRL UK6 was originally charged with the responsibility for diffusing XBRL and forengaging with corporate stakeholders in order to increase awareness of the technology and its advantages and benefits.However, XBRL UK’s diffusion strategy has only had a limited impact and the critical mass of acceptance by both preparers anduser stakeholder groups in financial reporting has not occurred (Cobb, 2008).

The ICAEW (2004) suggests that XBRL is currently perceived as a technology-driven innovation rather than a usefulorganisational tool and that this seriously inhibits the demand for the technology. This can be evidenced from the materialthat has been published that focuses primarily on the technical aspects of the reporting medium such as taxonomies, schema,linkbases and instance documents, rather than on the tools that can be built on this technology platform, and the uses towhich it can be put by different corporate stakeholders (Boritz & No, 2003). Thus, despite XBRL UK’s diffusion agenda, XBRL ismisconceived as being just a technical tool and hence diffusion has not occurred amongst corporate stakeholders.

Taking up XBRL UK’s mantle, the UK Government, as a key stakeholder and active member of XBRL UK, stepped into thevoid when Companies House decided to make use of XBRL in a formal, large scale, way in the UK and, at the end of 2005,adopted XBRL for the electronic filing of audit exempt accounts. In general the service was well received (Neveling, 2007),with Companies House reporting a 36 per cent increase in documents filed electronically in 2007/8 compared to 2006/7

5 In the context of corporate reporting Unerman and Bennett (2004) point towards the democratising influence that such internet-based stakeholderengagement could also play in enhancing corporate accountability.

6 XBRL UK is the UK arm of XBRL International and is charged with driving the adoption of XBRL forward in the UK. This involves four key functions:(i) promoting the use of the technology via marketing and education; (ii) providing support to adopting companies; (iii) managing the development of theUK GAAP and UK IFRS taxonomies; and (iv) representing UK interests at an international level.

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(Companies House, 2008; Mousa, 2010). In subsequent years these figures have improved year on year; however these de-velopments have been behind the scenes and remain largely unobservable to stakeholders and their communication net-works. While Companies House work very closely with data intermediaries to make use of XBRL, its work with the dataproviders does not focus on XBRL itself. As such the extensive use of this technology by Companies House is not having asignificant diffusion effect as a second generation reporting tool.

In tandem with developments at Companies House, in March 2006, Lord Carter of Coles released his Review of HMRCOnline Services report (Carter, 2006) recommending that companies file their company tax returns online using XBRL by31 March 2010. The government accepted Lord Carter’s recommendations but subsequently pushed the applicable date backto April 2011. HMRC though, unlike Companies House, has been actively working with tax filers and preparers towards theobjective of requiring companies to file XBRL-enabled corporation tax returns, including running a pilot programme forvolunteer companies in 2009. Following its pilot, HMRC has actively engaged stakeholders with its widely publicised iXBRLroad shows and events7 (Mousa, 2010).

Despite the activities of the XBRL community, including Companies House and HMRC in the UK and the SEC in the US, a2009 CFA survey of investment professionals worldwide found that, although 45 per cent of respondents were aware of XBRL,89 per cent did not consider themselves up-to-date on its potential usage in financial reporting (Canham & Gyorkos, 2009). InAugust 2008, BPMMagazine conducted a survey of 196 UK-based companies and government agencies, yet only one per centof respondents worked in companies that had implemented XBRL; the biggest barrier to implementation of the technologyrelated to the time and effort needed to learn about XBRL (Waters, 2008). To date, no studies have explored XBRL from astakeholder engagement and diffusion perspective in a UK context. A limited number of international studies have examinedthe diffusion of XBRL such as Troshani and Doolin (2007) who explored the perspectives of Australian corporate stakeholdersand found the lack of a perceived need for the reporting tool amongst their interviewees; they concluded that morenormative action was necessary to convince stakeholders of the benefits of the tool and that “collaborative relationships”(p. 193) were necessary. Nel and Steenkamp (2008) focused on South African chartered accountants’ views on XBRL; theyfound very low levels of awareness of XBRLwith only 11% of their respondents having any knowledge of the tool. Both of thesestudies show that there are significant barriers and a lack of stakeholder engagement and that diffusion is slow. Clearly thesebarriers to adopting new routines and procedures surrounding a new technology involve risk and uncertainty, with the cost ofknowledge transfer being high, requiring organisations to undertake extensive search costs to decidewhether to adopt, henceslowing any diffusion (Geroski, 2000). Any change in accounting procedures is costly, so there needs to be an imperative tochange (Malmi, 1999) but a further barrier for XBRL is the continual updates and improvements, such as taxonomy changesfor different GAAP, that delays adoption as companies become unsure as to how many more changes are still to be made(Geroski, 2000).

Nevertheless, with the supply push by two key regulatory stakeholders in the UK – HMRC and Companies House – it isimportant to identify the diffusion issues for UK corporate stakeholders. This paper examines the diffusion of this technologyin the UK amongst a wide range of key stakeholder groups: auditors; accountants; tax professionals; and users of financialinformation such as analysts and fund managers, as key players in XBRL and as the key constituencies for diffusion to occur(Cox, 2006). This paper also develops an understanding of diffusion in the UK, an important global financial market and thesecond oldest national participant body of XII (after the USA). Specifically, four research questions are addressed in this paper:(i) the extent of stakeholder engagement with, and diffusion of, XBRL in the UK; (ii) the extent to which the benefits of XBRLhave diffused down to stakeholders; (iii) the barriers to diffusion and stakeholder engagement with XBRL; and (iv) the rolethat regulators should play in diffusing this technology.

3. Research method

The literature shows that XBRL is primarily focused on a number of key stakeholder groups which, as Cox (2006) argues,are the key constituencies who need to engage in this technology for effective diffusion to occur. These groups form the focusof the study, namely: accountants in business (BUS); tax practitioners (TAX); auditors (AUD); and users of corporate reportssuch as fund managers and investment analysts (USER) (Cobb, 2008; Cox, 2006). Within preparer organisations, the digitalreporting process typically involves a number of functions other than accountants, such as those involved in informationtechnology (IT), internal audit, management accounting and information, the company secretariat and data-processing units(Cobb, 2008) and possibly each group will have a different perspective on the XBRL reporting environment. Hence all of thoseworking within preparer organisations (such as financial accountants working in business, IT staff, company secretaries,internal auditors and data-processing managers) were grouped together as ‘Business’ (BUS).

Because of the differing insights to be gained from the perspectives of these four stakeholder groups, a questionnaire surveywas undertaken that specifically addressed the perspectives of these groups. Thus, four questionnaires were developed for thefour stakeholder groups covering the four research questions. The questions were derived from the extant literature and re-flected the key benefits and barriers identified for the successful diffusion of a technology like XBRL. Several of the questionswere made unique to each survey instrument to reflect the differing roles of the stakeholder groups in the financial reportingprocess but the majority of questions were common to all four versions of the questionnaire enabling some comparability

7 Inline XBRL, or iXBRL, is HMRC’s XBRL technology for filing tax returns.

Table 1Questionnaire distribution and response rates.

Group Questionnaire No. posted No. of responses % Response rate

Auditors AUD 250 13 5Tax TAX 250 33 13IT BUS 123 13 11Company secretaries BUS 140 21 15Data processing managers BUS 100 8 8Financial accountants BUS 250 19 8General practitioners BUS 251 22 9Internal audit BUS 50 2 4N/A BUS 1* –

Fund managers USERS 286 17 6Investment analysts USERS 33 4 12Total 1733 153 9

Notes: This table details the number of respondents to the questionnaire survey. In particular, the table shows, for each category of stakeholder, the numberof questionnaires that were sent out and the number and percentage of replies that were received. One respondent (*) did not wish to be identified andremoved the front cover and all identifying codes on the questionnaire; thus, it was not possible to classify this respondent but it has been included in theBUS respondents.

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across the stakeholder groups. The questionnaires were piloted with several academics and practitioners and changes weremade during this process to refine the questions asked and the manner in which these questions were framed.

The business questionnaire (BUS) contained ten general questions that covered how each company published its annualaccounts, followed by which stakeholders they thought used their published information and their own use of documentsdisplayed on the internet as a measure of their own engagement. The next sections covered specific features of XBRL and therespondents’ perceptions of its benefits and the barriers to diffusion and the role that regulation and training might play. Thefinal section of the questionnaire covered demographic information such as age, gender and size of company.

The first section of the auditors’ questionnaire (AUD) covered details about their clients’ use of HTML, PDF and XBRL andexamined who was responsible for producing and checking digital reports in their client companies. The next sectionscovered some of the questions about the use of the internet that were common to the BUS questionnaire.

The first section of the tax questionnaire (TAX) covered the type of taxationwork that was undertaken by the respondentsto obtain information on the respondents’ internet familiarity and usage followed by questions common to the BUS and AUDquestionnaires. The final questionnaire was targeted at users (USER) and contained questions common to the other ques-tionnaires but also looked at the extent to which online reports were used, and the degree to which electronic analysis wasundertaken by them.

A postal questionnaire survey was sent to 1733 business managers, auditors, tax professionals and users comprising invest-mentanalysts and fundmanagers in thespringof2008.Asnotedpreviously, anumberofpersonnel, engaged indifferent functionswithin business organisations,may be involved infinancial reporting and all of these are grouped together as Business (BUS) andwere sent the “business”questionnaire. Fundmanagersand investment analystsweregrouped together inauser (USER) category.Table1provides somebasic informationregarding thedistributionof thequestionnairesand the response rateof the respondents.

The samples of respondents were obtained from: (i) a random selection from the ACCA database of members (such as forfinancial accountants, general practitioners, tax professionals and auditors); (ii) a complete population of ACCA members(such as for company secretaries, IT professionals, data-processing managers, internal auditors); (iii) a list of all of UK-basedfundmanagers listed on the Association of Investment Companies website database; and (iv) the attendees at a Securities andInvestment Institute seminar in May 2008. The postal questionnaires were sent in March 2008 with a second mailing in lateApril 2008. Although the overall response rate was low at 9 per cent, the individual response rate varied between practi-tioners, ranging from 15 per cent for company secretaries to only 4 per cent for internal auditors and 5 per cent for auditors.8

The poor response rate overall is in line with other business-related surveys where researchers cite ‘questionnaire fatigue’(Saunders, Lewis, & Thornhill, 2007: 215) as a possible reason for the typical response rate of 10–20 per cent to business-related postal questionnaire surveys (Saunders et al., 2007). The following section explores the key findings from the sur-vey, detailing diffusion and stakeholder engagement with XBRL across the research questions.

4. Research findings

4.1. Diffusion and engagement amongst stakeholders

The first research question investigates the extent to which XBRL has diffused amongst the business community. From thesurvey findings most of the 86 business respondents (BUS) were financial accountants, financial directors or worked in

8 This latter finding resulted in only 13 questionnaires being returned from auditors; thus it is very difficult to draw meaningful generalised conclusionsfrom such a small sample. However, the observations from this small group of respondents have been included to assist in a comparison between auditorsand the other groups. It is argued that treatment of these respondents as a series of cases, even if not generalisable reliably, provides useful insight into thesubject of this paper.

Table 2Users of Internet reports.

Users No. Mean Std Dev Min Max Skewness Kurtosis

Lenders 83 2.57*** 1.212 1 5 0.600 �0.256Customers 87 2.67*** 1.188 1 5 0.593 �0.449Investors 83 2.84 1.494 1 5 0.275 �1.374Analysts 85 2.71** 1.317 1 5 0.500 �0.784Companies house 87 2.75* 1.213 1 5 0.383 �0.425Suppliers 86 2.79* 1.139 1 5 0.571 �0.320HMRC 86 2.87 1.196 1 5 0.421 �0.458Employees 85 2.91 1.007 1 5 0.479 �0.421Others 63 2.97 1.062 1 5 0.232 0.532Charities/NGOs 85 3.29** 1.233 1 5 0.040 �1.046

Note: This table summarises views of Business and Auditor respondents regarding the users of internet reports. Means reflect a Likert scale where1¼ strongly agree, 2¼ agree, 3¼ neutral, 4¼ disagree, 5¼ strongly disagree. ***/**/* represents a significant difference from the neutral response of 3 at the1%/5%/10% level. Due to the non-normality in the data as shown by the skewness and kurtosis, a number of tests were undertaken to examine the differencesbetween the stakeholder groups. In particular, the Kruskal Wallis, Mann Whitney, Levene’s and t tests suggested that there are no significant differencesbetween the two groups.

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related roles that were involved with the production of financial data and represented varied types of businesses andfunctions facilitating a broad stakeholder perspective. If significant diffusion had occurred, these groups, as key stakeholders,should have already engaged with XBRL.9

None of the 86 business respondents produced XBRL-enabled financial statements at the time of the survey, and very fewbusinesses evenusedHTML topublish their annual reports, althoughhalf of themproducedPDFversionsof themwhich are thenmade available online. PDF documents are less accessible than HTML presentation formats and their widespread use arguablyrepresents a backward step from prior surveys on the use of HTML versus PDF for digital financial reporting where higherpercentages of HTML use were typically reported (Allam & Lymer, 2003; Rowbottom & Lymer, 2009b)10. This confirms thatdiscussion about thefinal stage of the XBRL diffusionprocess, implementation or change is premature. Indeed, only five per centof businesses reported that XBRL had ever even been discussed within their organisations. Thus, the overwhelmingmajority ofbusinesses are unaware of XBRL or knowanything thatmight allow them to have an informed internal debate about using XBRLwithin their business reporting practices. Knowledge of an innovation is the first step in the diffusion process (Brancheau &Wetherbe, 1990) and in this study key stakeholder groups are demonstrating no knowledge of the XBRL reporting tool. Com-panies are continuing to use traditional, tried and tested, software such as spreadsheets on an adhoc basis forfinancial reportingand accounting. Indeed, only 15 per cent of respondents state that they even use integrated customised accounting packages.

Similar to the business perspective, auditors also stated that PDFwasmore commonly used by their clients than HTML andthat XBRL was not yet used by any of their clients. The survey results show that companies that produce their annual reportson the web usually delegate the responsibility to the financial reporting department (in 29 per cent of cases), the ITdepartment (23 per cent), management (20 per cent) and external web designers (18 per cent) but rarely to investorrelations.11 The auditors acknowledged that thesewere the key constituencies involved in digital reporting within businesses,reflecting that XBRL needs to be diffused to a wide range of functions within organisations.

The practice background of the respondent auditors demonstrated that smaller firms’ clients do not even display theirfinancial reports on the internet.12 Thus, key parts of two stakeholder groups in the diffusion process have no engagementwith the digital reporting process at all, let alone with the second generation of this technology; these accountants andauditors will increasingly need to engage with XBRL as Companies House and HMRC roll out e-filing.

Three quarters of tax respondents file tax returns online13; this has been a recent change asmost of these have only starteddoing so in the last few years. However, only three respondents had clients that were either using XBRL, were currentlyinstalling XBRL or were in active discussions about it.

9 Thirty five per cent were involved in financial reporting, one fifth was located in the management accounting function and nearly one quarter wasinvolved in operations, finance or similar business-related roles. Most of the respondents had over 15 years experience, were mainly in their 40s and nearly80 per cent were male. Sixty-two per cent worked in companies with less than £10 million turnover, but 10 per cent were employed in companies withturnover greater than £1 billion.10 Although the majority of these studies focused on larger companies so this may simply reflect the fact that the present study focuses on firms of allsizes.11 However, most respondents were not sure whether anyone in their organisations ever checked their digital reporting and, more worryingly, 24 per centclaimed that no-one had any responsibility for checking the financial information that was on their websites.12 While only 13 auditors replied to the questionnaire survey, roughly one third of these auditor respondents were partners within their firms, anotherthird were managers and the final third were general auditors. Most of them were employed within the audit function although a couple worked in risk ortransaction services. The size of practice was split with 39 per cent working in practices with 2–5 partners and most of the rest working in practices withmore than 30 partners.13 Sixty per cent of the tax practitioners work in practices with 2–5 partner/directors, but one quarter work in firms with more than 30 partners ordirectors. Over half of the respondents either use basic off-the-shelf tax packages with spreadsheets, and 42 per cent use integrated customised taxpreparation packages without any spreadsheets. Over three quarters of the respondents prepare corporation tax and personal tax calculations, but very fewprepare tax returns outside the UK.

Table 3Use of Internet reporting.

No. Mean Std Dev Min Max Skewness Kurtosis

Improve accountability 115 1.96*** 0.804 1 5 0.680 0.774Search facilities 63 2.75*** 0.671 1 4 0.017 �0.241

Note: This table shows the responses to the questions on the use of internet reporting to improve accountability or to enhance search facilities. Means reflecta Likert scale where 1¼ strongly agree, 2¼ agree, 3¼ neutral, 4¼ disagree, 5¼ strongly disagree. ***/**/* represents a significant difference from the neutralresponse of 3 at the 1%/5%/10% level. The KruskalWallis, MannWhitney, Levene’s and t tests show that there is a difference between the groups on the use ofthe internet for improving accountability whereby the users had a mean of 1.62, business respondents had a mean of 2.01 and auditors had a mean of 2.23.There were no differences between the groups with regard to search facilities.

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From a tax perspective, the tax professionals agreed that clients will require them to be more knowledgeable about XBRLin the next five years and they seemed to be more knowledgeable about XBRL than the auditors or business respondents; thismay be because of the visible push from HMRC to introduce XBRL filings via the Carter Review implementation project.Interestingly, this awareness appears to have resulted from a regulatory push from the Government in the form of a coerciveisomorphism (DiMaggio & Powell, 1983), rather than from any specific activities or promotion by XBRL UK. Nevertheless,although the respondent tax professionals weremore knowledgeable about XBRL, as a key XBRL stakeholder constituent theydid not appear to be actively diffusing it to their clients or pushing them to engage with the development of this technology.Such engagement is key, as knowledge and peer and expert recommendations are crucial in allaying the fears associated withnew technology adoption (Brancheau &Wetherbe, 1990). Outsiders need to be persuasive and spread the news of XBRL suchthat an information cascade filters the technology downstream to become process innovations in businesses and the financialreporting user community (Geroski, 2000). These network externalities are important in persuading organisations that theywill not be stranded and left with an obsolete technology with first mover disadvantage (Geroski, 2000). Such externalitiescan be resolved through the provision of information by external advisers such as auditors and tax specialists and fromstandard setting such as creating the uniformity of taxonomies currently being led by XII and XBRL UK.

The user respondents’ roles varied from investment managers to analysts to corporate finance specialists. Theyacknowledged that the availability of data on the internet had changed the way that companies’ financial information is nowanalysed; users generally obtain information on companies from third party providers, with other data manually extractedfrom source documents such as digital reports but most data has to be manually input from these digital source documents.14

Despite this, none of the users had ever used any XBRL information and, similar to the auditors and business stakeholdergroups, knowledge of XBRL has not diffused down to them, and hence no demand-pull for XBRL has happened.

The business respondents and auditors were asked who they regarded as the main users of internet information as thesewould be the stakeholders that could be targeted by the XBRL community; the responses to this question are summarised inTable 2. The respondents ranked lenders and customers as the top two users, with means of 2.57 and 2.67 respectively on a 5-point Likert scale.15 Analysts and Companies House are ranked next, and investors are only ranked sixth out of 10 potentialusers; nearly one third of business respondents do not think that investors use internet reports and nearly a quarter do notthink that analysts use internet reports. This evidence is surprising as these responses suggest that reports posted on theinternet are not important to a large proportion of the purported major users of financial information. If such limited use isactually being made of internet reports by investors, it could explain why XBRL diffusion has not occurred maybe reflectingthat the technology has not been matched to the particular needs of this user group (Geroski, 2000). However, this findingcontradicts recent studies that suggest that downloads of web-based reports by analysts and investors count for a sizeableproportion of the internet use of corporate websites (for example, see Rowbottom & Lymer, 2009b). A possible reason for thisfinding may be that the responses to the survey were made specifically in the context of XBRL rather than of other websiteinformation more generally.

Although not reported here, the results shown in Table 2 were disaggregated across business and auditor respondents todetermine whether the respondents’ backgrounds influenced the opinions given.16,17 The auditors’ ranking proved to beslightly different from that presented by the business respondents18 whereby auditors ranked analysts, suppliers and lendersas joint equal in importance (mean of 2.46) as users of internet reports, and the business respondents ranked lenders (mean2.59) followed by customers (mean 2.69)19 as the main users. In general the business users were more neutral over the use of

14 Data are also obtained from speaking to, and meetings with, company management.15 The t-test statistic shows that these were significantly different from the neutral value of 3.16 The detailed results are available from the authors on request.17 The response rates were fairly low in all cases and performing meaningful non-response bias tests may be problematic. However, for the businesssample, where there were 86 respondents, a comparison was made between those that replied before the end of April 2008 and those that replied fromMay 1st onwards (Wallace & Mellor, 1988). The t tests generated indicated that in only two cases were the group means different. First, in Table 2 forsuppliers the group means of 2.60 and 3.25 for the early and late responders respectively differed significantly. Second, in Table 4 one item generated asignificant difference between the early respondent group and the late respondent group: ‘reusing data’, with means of 2.79 and 2.17 respectively. Whilst inthese two cases, the potential for response bias exists there were no other significant differences in mean response. Levene tests of variance equality alsosuggested that in the vast majority of cases early and late responses did not differ.18 Although not significantly different statistically.19 This is more in keeping with the recent study of downloaded data from Internet websites (Rowbottom & Lymer, 2009b).

Table 4Diffusion of the benefits of XBRL.

No. Mean Std dev Min Max Skewness Kurtosis

No re-keying of data 38 2.26*** 0.644 1 4 0.338 0.442Inter-operability 33 2.27*** 0.574 1 3 �0.052 �0.375Data comparability 39 2.31*** 0.694 1 4 �0.003 �0.159Speed 41 2.37*** 0.859 1 5 1.186 2.776More analytical 37 2.49** 0.651 1 4 �0.267 �0.126Re-use of data without losing integrity 37 2.51** 0.607 2 4 0.735 �0.358Reliable source 35 2.60* 0.651 2 4 0.625 �0.523Reduce processing errors 37 2.65 0.824 1 5 0.439 0.872

Note: This table reports the descriptive statistics of respondents’ agreement and disagreement on the benefits of using XBRL – Business, users and taxrespondents. The majority of respondents did not know. Means reflect a Likert scale where 1 ¼ strongly agree, 2 ¼ agree, 3 ¼ neutral, 4 ¼ disagree,5 ¼ strongly disagree. ***/**/* represents a significant difference from the neutral response of 3 at the 1%/5%/10% level. The Kruskal Wallis, Mann Whitney,Levene’s and t tests show that there are no significant differences between the groups on any of these benefits. However there were only 2 user respondentson average and 11 tax respondents so these sample sizes are too small to draw any meaningful statistical tests.

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internet reports than the auditors. Interestingly, charities and NGOs were not considered to be major users of internet-basedfinancial reports, despite the furore that these bodies have created over the approval of IFRS 820 and the lack of reporting oncertain areas of business. The slight difference in the rankings by auditors and business respondents is interesting and worthyof further research; however, it could relate to the types of communication networks between these groups and their variedinteraction with regulatory groups and the XBRL community.

The knowledge base of the user group of stakeholders was the poorest of the four stakeholder groups and diffusion isunlikely to occur if there is no demand-pull for it (Abrahamson, 1991; Cooper & Zmud, 1990). The pressure to adopt comesfrom either the organisational need (pull) or from the innovation push itself (Cooper & Zmud, 1990), the latter of which wasseen in the diffusion of first generation digital reporting. From these findings it appears that there is limited evidence ofdiffusion cascading down to these key stakeholder groups.

4.2. Diffusion of the benefits of XBRL

The second research question examines stakeholder awareness of the benefits of XBRL. While most respondents reportedlittle engagement with XBRL, it could not automatically be surmised that they would not know about its benefits. The re-spondents were first asked about their knowledge of the benefits of digital reporting in general (Table 3) to contextualise theirresponses about second generation reporting, and were then asked about the specific benefits of XBRL (Table 4). Table 3shows that the respondents agreed that corporate web sites increased their accountability to stakeholders (mean 1.96),with users strongly agreeing that accountability would be improved, and that search facilities on web sites were easy to use,suggesting a context in which XBRL could become widely adopted if circumstances so allowed.

However, when asked specifically about XBRL (Table 4), only 38 respondents claimed that they knew enough about it toanswer the questions.21 This creates another situation where one set of primary adopters of XBRL, the preparers, will have toexert a supply push onto another set of adopters, the users of financial reports, to create a demand pull so that the informationcascade filters down (Geroski, 2000). Thus, awareness and knowledge of XBRL gleaned by auditors and tax specialists shouldcascade down to preparers and businesses with a push such that a demand pull arises from businesses. In turn, the supplypush of businesses will cascade down to users and create further demand pull. The communication networks between thesestakeholder groups need to be strengthened so that the push and pull mechanism begins to happen.

From those that could respond to the question on the benefits of XBRL, therewas a significant acknowledgement that XBRLeliminated the need to re-key information, enabled greater data comparability, was inter-operable and sped up and improveddata analysis, but although the two users were very positive, the tax respondents were more equivocal. The auditors’questions were more detailed22; and their responses suggested that as a group they were more informed of the claimedbenefits for this technology, specifically for standardised reporting and the use a of common terminology that may be usefulto users. They also acknowledged that the internet was a goodmedium for increasing users’ access to information and that thepurported benefits of XBRL would help to achieve these aims by allowing users to analyse data more easily and by not havingto re-key data. However, with so few respondents answering these questions the potential benefits of XBRL have not beendiffused to the stakeholder groups. If widespread diffusion of the technology is considered to be a good thing, peer and expertrecommendations, whereby early devotees share their experiences of XBRL with their business colleagues, are needed toestablish a demand-based need for the reporting tool and for a bandwagon effect to develop (Abrahamson, 1991). However,the disconnectedness of the stakeholder groups (Abrahamson, 1991) and the more diverse their needs are, the more that thecommunication and persuasion between them is impeded (Bjornenak, 1997; Geroski, 2000), thus acting as a diffusion barrier.

20 Around 80 charities and NGOs campaigned against this standard under the banner of the Publish What You Pay Coalition (Crawford, Helliar, & Power,2010).21 This comprised 2 users, 11 tax professionals and 25 business respondents.22 The detailed results are available from the authors on request.

Table 5Obstacles hindering the diffusion of XBRL.

No. Mean Std Dev Min Max Skewness Kurtosis

Time and effort to learn XBRL 68 1.79*** 0.724 1 4 0.579 �0.007Implementing new reporting procedures 70 2.14*** 0.822 1 5 0.534 0.854Cost of software 60 2.17*** 0.977 1 5 0.894 0.893No need for XBRL 71 2.25*** 0.890 1 4 0.848 1.261Proliferation of taxonomy elements 55 2.44*** 0.918 1 5 0.492 0.767Little software available for displaying and analysing XBRL data 61 2.46*** 1.058 1 5 0.460 �0.063Other packages exist that do the same as XBRL 53 2.70** 1.049 1 5 0.229 �0.212When transmitting documents via the Internet:Recipients can be assured that data has not been changed 139 2.86 1.126 1 5 0.288 �0.602Confidentiality is guaranteed 140 3.40*** 1.002 1 5 0.127 �0.859

Note: This table reports all four respondent groups’ agreement to the obstacles of using XBRL. Most respondents answered ‘do not know’. Means reflect aLikert scale where 1 ¼ strongly agree, 2 ¼ agree, 3 ¼ neutral, 4 ¼ disagree, 5 ¼ strongly disagree. ***/**/* represents a significant difference from the neutralresponse of 3 at the 1%/5%/10% level. The Kruskal Wallis, Mann Whitney, Levene’s and t tests show that there are no significant differences between thegroups on any of these obstacles apart from: (i) the data has not changed through transmission where auditors strongly agreed; and (ii) at the 10% level ontime and effort to learn where auditors again agreed far stronger than the other groups.

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Thus, the communication networks between the auditors, tax practitioners, businesses and users appear to have brokendown and although normally well-connected, these groups have become disconnected and heterophilic with regard to XBRL.

4.3. Barriers to diffusion

The third research question examined the barriers that might be restricting the diffusion of, and stakeholder engagementwith, XBRL. Respondents were asked to comment on a list of potential obstacles to the take-up of the technology that hadbeen extracted from the prior literature, as presented in Table 5.23

Again, a significant number of the respondents in three of the groups did not think that they knew enough about XBRL tofully answer these questions with, for example, just 3 user respondents replying.24 In general, those who did respond re-ported that, across all the groups a number of key obstacles impeded the adoption of XBRL in corporate reporting, with thetime and effort to learn XBRL as the main stumbling block (mean of 1.79), followed by software cost, (2.17) and a lack of ‘need’for XBRL (2.25). The only mean greater than 3 was generated by a statement relating to confidentiality where the figure of3.40 proved to be significantly higher than the neutral response of 3, suggesting that the respondents do not believe onlinecommunication to be free from the risk of anonymity being compromised. The auditors agreed more strongly than the othergroups that the time and effort to learn was a problem, although this might have reflected their greater knowledge of XBRLthan the other groups. Over one third of the business and tax practitioners also thought that time and effort issues hinderedthe implementation of XBRL. More fundamentally, one third of business users did not think that there was any need for XBRLat all, suggesting a gap exists between these key stakeholders and the XBRL community. Thus individuals and their individualorganisations, as exogenous influences on diffusion, are not taking ownership of the need for XBRL (Geroski, 2000).

The US XBRL consortium has acknowledged that there might be incremental costs and effort associated with XBRLadoption and that it may take several years before the benefits are fully recognised. Further, the Association of GovernmentAccountants reported that there was a learning curve and that the time line is often greater than that originally envisaged(AGA, 2008). Contrary to this view, the SEC’s Advisory Committee on Financial Reporting (2008) found that an initial taggingexercise on average only took 80–100 hours and this reduced dramatically in subsequent periods. This message needs to bepublicised farmorewidely so that stakeholders in the diffusion process realise that XBRL is not as difficult as theymay initiallybelieve.

It is claimed that XBRL provides useful, accurate and timely corporate information that can be used for further analysis(Willis, 2005). It is essential, therefore, that electronic data is viewed by its potential users as being complete and accurate andthat users can be assured about the integrity of XBRL data. However, the findings here show that stakeholders need to beconvinced that the data will be complete and accurate when they automatically access data to upload into their models.25

While some work is being done in this area, auditor engagement and assurance over XBRL data is limited and, if XBRLdata is unauthenticated, data integrity issues will continue to impede diffusion.

Two assurance issues likely to be of concern are those associated with checking that the correct XBRL taxonomies havebeen used and that all information has been tagged correctly against those taxonomies. Over half of the auditors agreed thatthey should be involved in the conversion of clients’ annual reports into XBRL documents, irrespective of whether thetechnology was applied voluntarily or was mandatory. Around two thirds of the auditors also thought that they should beinvolved in converting both statutory and non-statutory information into XBRL tagged documents. They also all agreed, or

23 Strictly speaking the final two items in this table are not obstacles but are included here for completeness.24 The detailed results are available from the authors on request.25 The SEC is deliberately not claiming that SEC EDGAR XBRL data is assured or checked by the SEC. Thus, even SEC sourced data cannot be relied upon atthis point (Boritz & No, 2008).

Table 6XBRL Diffusion in organisations.

Organisations No. Mean Std Dev Min Max Skewness Kurtosis

Should have formal policies 78 2.14*** 0.785 1 4 0.240 �0.370Should have clearly written policy manuals for XBRL 69 2.36*** 0.954 1 5 0.564 0.310Having accounting/tax staff with knowledge of XBRL would help 70 2.95 1.096 1 5 0.631 �0.552Have IT staff with enough technical knowledge of XBRL 65 3.14 1.0444 1 5 �0.030 �0.659Have the IT expertise 67 3.54*** 1.146 1 5 �0.188 �1.167

Note: This table reports all four respondent groups’ agreement to implementation issues of using XBRL. Most respondents answered ‘do not know’. Meansreflect a Likert scale where 1 ¼ strongly agree, 2 ¼ agree, 3¼ neutral, 4 ¼ disagree, 5¼ strongly disagree. ***/**/* represents a significant difference from theneutral response of 3 at the 1%/5%/10% level. The auditor group was not asked about formal policies and policy manuals. The Kruskal Wallis, MannWhitney,Levene’s and t tests show that there are no significant differences between the stakeholder groups.

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were neutral, that clients would need their auditors to be more knowledgeable about XBRL in the next five years. Thus,auditors appear to be aware of the issues surrounding XBRL but they need to do more about assurance issues over XBRL andengage more fully in the diffusion process.

The tax practitioners were also asked about whether auditors or tax professionals should be involved in checking thecorrect application of XBRL taxonomies at the organisational level, for example, the HMRC-specific corporate tax taxonomy.Although half of them did not know, most of the others agreed that auditors and tax professionals should be involved inchecking that clients had implemented the correct taxonomies accurately. However, most of the respondents did not knowanything about XBRL taxonomies or the checking of them and there was little knowledge about how taxonomy updatesshould be maintained. Confusion over tagging and the continual development and use of taxonomies is apparent, and bothmay be hindering the diffusion process (Geroski, 2000). Indeed, such technical issues as tagging and taxonomies may befrightening away potential users of XBRL, hence hindering diffusion.

There was also a doubt as to whether businesses had an adequate range and depth of IT expertise or enough knowledge ofXBRL (Table 6) to be able to implement it (the mean of 3.54 is significantly different from the neutral response indicating thatrespondents did not agree that businesses have the IT expertise). This tension between IT knowledge and technical tax andaccounting knowledge has been recognised by the Association of Government Accountants (AGA) which reported that XBRLprojects should include a “bi-directional educational overview” (AGA, 2008) whereby accountants and IT specialists are bothinvolved in implementing XBRL together to ensure successful implementation as homophilic partners (Geroski, 2000).Further, the respondents in this survey agreed that companies should have formal policies with regard to electronic–systemrelated matters (mean of 2.14) and that there should be a clearly written policy manual for XBRL (mean of 2.36).

These findings are potentially worrying as key stakeholders do not think that businesses have the core competencies toimplement XBRL successfully and there is evidence that a more effective multi-stakeholder approach involving auditors, ac-countants in business, IT technicians and users is necessary for adequate diffusion of XBRL to occur. The findings also highlight,more generally, that the key barriers to diffusion include technical complexity, the lack of appropriately skilled practitioners toimplement XBRL, and the need for better levels of assurance over the data26; these results confirm the findings of Bradford andFlorin (2003) who state that the perceived complexity of an innovation leads to resistance due to a lack of skills and knowledge.Thus the communication networks between these stakeholders need to be effective in allaying such fears.

4.4. The role of regulators in the diffusion process

The final research question examines the political context of XBRL adoption and whether the current focus in the UK onmandated use for regulatory purposes could be effective in coercing organisations into adopting XBRL. Powerful organisationssuch as Companies House and HMRC have a stake in diffusing XBRL and, acting in concert, they could perhaps exert politicalpressure to force companies to adopt XBRL (Abrahamson, 1991).

All four groups of respondents were asked about the involvement of the Government in the adoption of XBRL. Thequestion focused on five categories of reports and filings that are routinely made by UK companies: financial reports; non-financial reports; stock exchange listing pronouncements; tax filings; and Companies House filings. Table 7, panels A to E,show the respondents’ views onwhether there should be: voluntary filing; mandatory filing within 2 years; mandatory filingin 2–5 years; mandatory filing in 5–10 years; or that the Government/regulators should not advance the use of XBRL at all.

A sizeable proportion of the respondents did not know what to recommend for all five categories of reports, particularlyamongst the user group surveyed. For financial reports, themajority thought that there should either be voluntary adoption orthat the Government and regulators should not advance XBRL at all. This contrasts dramatically with the direction of the SEC inmandating use for such reporting in the USA and developments in the UK. Auditors however, adopted a different position fromthe other respondents who thought that XBRL should become mandatory for use in financial reporting within 2 years.

26 See also Cordery et al. (2010) for further discussion of the reasons for non-adoption of XBRL within an Australian context. Results reported in this papersuggest three reasons for non-adoption to date; lack of government ‘push’ produces organisational ignorance of the technology, organisations do notbelieve XBRL will beneficially reduce costs, and the complexity of developing the taxonomy (structured language) of XBRL. These results, albeit in adifferent geographical context, mirror closely the results in the UK context reported here.

Table 7Role of regulation in diffusion.

Respondents groups

XBRL should be: Business Auditors Tax Users

Panel A – Financial reportsVoluntary 23 8 9 14Mandated within 2 years 4 31 3 10Mandated in 2–5 years 11 8 12 –

Mandated in 5–10 years 13 – 12 –

Gov’t/regulators should not advance XBRL 15 15 15 10Panel B – Companies house filingsVoluntary 21 15 15 24Mandated within 2 years 12 8 6 –

Mandated in 2–5 years 10 15 12 –

Mandated in 5–10 years 7 8 3 –

Gov’t/regulators should not advance XBRL 13 15 18 10Panel C – Non financial reportsVoluntary 22 15 18 14Mandated within 2 years 5 8 – –

Mandated in 2–5 years 11 23 6 5Mandated in 5–10 years 7 – 6 –

Gov’t/regulators should not advance XBRL 15 31 24 15Panel D – Stock Exchange listing pronouncementsVoluntary 16 23 15 19Mandated within 2 years 7 15 18 5Mandated in 2–5 years 12 15 6 –

Mandated in 5–10 years 11 – – –

Gov’t/regulators should not advance XBRL 14 15 15 10Panel E – Tax filingsVoluntary 16 15 9 14Mandated within 2 years 6 8 6 5Mandated in 2–5 years 19 8 12 –

Mandated in 5–10 years 8 31 3 –

Gov’t/regulators should not advance XBRL 16 15 24 15

Note: This table reports the percentage of respondents agreeing to the type of adoption of XBRL. Most respondents answered ‘do not know’.

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With respect to Companies House filings, the respondents preferred voluntary adoption and no interference by thegovernment or regulators (even though this had already begun to occur at the time the survey was undertaken). The auditors’preferred time line, interestingly, was more forward-looking for Companies House filings in comparison to other financialreports. This result is interesting in the light of the pronouncements of Companies House in the UK and the SEC in the USwhich have both accepted online filing using XBRL for a number of years, but this fact does not appear to have reached keystakeholders, who are not expecting or expressing a desire to file their accounts using XBRL, even though theymay already bedoing sowithout being aware of it. This may be because Companies House has applied XBRL through filing intermediaries andhas not directly engaged with end users in the way that HMRC has chosen to do (Mousa, 2010) thus XBRL has much greatervisibility for tax filings than it does for Companies House filings.27 Nevertheless, although HMRC and Companies House arenot directly acting in concert, they are forcing companies to adopt XBRL from the homogeneity of their interests(Abrahamson, 1991). In the US, the SEC’s actions have been much more visible, especially with preparers, who have beentasked with determining the best way for their companies tomake their XBRL filings, either in house or through third parties.

In this survey a strong view was expressed that XBRL should not become mandatory for non-financial reports and stockexchange listing pronouncements (unlike the current situation in the USA); respondents prefer the continued non-involvement of government and regulators. On tax filings most also supported the non-involvement of regulators with apreference for voluntary filing using XBRL. The tax practitioners were strongest in their views that XBRL should not beimposed on them; this finding is interesting given that mandatory XBRL filing for corporation tax is now in place. However, atthe time of this survey the key stakeholder groups thought this inappropriate and, given the low levels of XBRL awareness,this may have arisen from amisconception about what was entailed. It is essential therefore that HMRC actively engages withthese key stakeholder groups to educate them about the processes involved and the operational implications.28 The auditorsalso expressed a preference for tax filings to be made mandatory only within a 5–10 year time frame.

27 The SEC, meanwhile, in December 2008 approved a draft rule change requiring US GAAP preparers to submit accounts in XBRL and adopting a phasedapproach based on the size of filers, with larger companies commencing XBRL filings from June 2009. By August 2010 over 2000 filings had been receivedtotalling over 1million data points (Blaszkowsky, 2010). The remaining 1200 of the first phase of filers will file by the end of this cycle and over 10,000companies will then be required to use the same system to file in the second phase that began in June 2011.28 Since the mandating notice HMRC has been heavily engaged with a road show process seeking to address this lack of diffusion in keeping with theresults reported here. However, this road show effort is solely focused at the tax filing use of XBRL – it does not seek to primarily support wider diffusionaspirations beyond this regulatory filing focus.

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In summary, key stakeholder groups do not appear to want XBRL to become mandatory and do not welcome a regulatorydemand for the use of XBRL. There is a need for a better understanding of this technology, with the dissemination of positiveexperiences throughout their communication networks including those of government agencies (Abrahamson, 1991) and formoreword of mouth communication (Leonard-Barton & Deschamps, 1988). Indeed, in the USA the SEC’s Advisory Committeeon Improvements to Financial Reporting (2008) acknowledged that, despite the significant benefits to businesses and users(including retail investors, market modellers and research analysts) of adopting XBRL, it is only when regulators, as outsiders,become involved that the benefits begin to filter down to the business community.

5. Discussion and conclusion

The survey findings reported in this paper show that diffusion of XBRL has not happened despite this survey beingconducted in the run up to the HMRC mandation of XBRL for corporation tax filings. None of the key stakeholder groupsdirectly affected by XBRL have engaged with its diffusion. Auditors and tax professionals, apart from those that have hadsignificant involvement with XBRL as core members of the XBRL, Consortium are still ignorant about its benefits and ad-vantages. Similarly, business and user stakeholders have not embraced the technology or engaged with it in any substantialway. This is despite the strong claims made of XBRL’s potential to transcend communication barriers between the stake-holders of the business community and to become a universal business reporting language at a time when radical de-velopments in this field are increasingly being called for (Mousa, 2010).

The research reported here demonstrates a significant lack of knowledge about XBRL amongst the surveyed stakeholdergroups in the UK in the immediate run up to themandation of its use for corporation tax filing. This is perhaps both surprisingand worrying given the length of time that XBRL has been in active development in the UK and elsewhere. However, thefindings reported also accord with surveys conducted in the same period, including those of Compliance Week (2008) andBPMMagazine (2008), which also found that there was very little knowledge of XBRL in business at the timewhen it could beexpected that such interest and knowledge was likely to be growing rapidly. The regulatory push, however, may start tocoerce companies to adopt XBRL. Regulatory outsiders are promoting XBRL with a supply push (Abrahamson, 1991; Malmi,1999) but outsider influences on preparers could be supplemented by the auditors who are often at the forefront of newdevelopments in financial reporting, such as in the adoption of International Financial Reporting Standards. However, theknowledge of the technology has not yet diffusedwithin this group beyond a small number of specialists, oftenworking in Big4 audit firms or IT audit functions. Auditors typically advise their clients on new accounting and reporting related de-velopments and generate large revenues from advising non-audit clients on new IT system implementations. From this studyit appears, however, that auditors are not generally conversant with XBRL and it is unlikely therefore that collectively theywillbe actively advising their clients to adopt the technology in the near future, or to proactively explore its potential use for moreeffective external reporting, or internal management reporting. Specialists within the Big 4 accounting firms have been anactive part of the XBRL community, but they are not being effective in diffusing XBRL down through their own organisationsor those of their peer networks down to businesses and users thus negating any possibilities for demand pull. This may be dueto an economic assessment that there are no profits to be made by the large accounting firms, or that the learning and riskinvolved are too great with perhaps spill-over worries impeding diffusion (Geroski, 2000).

The evidence presented in this paper therefore demonstrates that the XBRL community has failed in its attempts to diffuseXBRL. The actions of the XBRL community may have been appropriate when XBRL technology was in development a decadeago where the technological aspects, rather than the business aspects, were in much sharper focus. However, there is littleevidence that effective attempts have been made to extend beyond development (Troshani & Lymer, 2010). Knowledge of thetechnology and its reported benefits is poor and for adoption of XBRL to occur it has to be seen as a good thing. Because of itsperceived inherent complexity organisations need training, but the allocation of resources for training are not being made(Bradford & Florin, 2003). For full diffusion to occur professional accounting bodies may need to raise the profile of XBRL(ICAEW, 2004), but more generally, auditors and tax professionals have not taken it on board as a tool to recommend to theirclients; preparers and users remain largely ignorant of the technology. Only Government-led initiatives have made anyheadway but, in the UK even these efforts have been limited to selected regulatory reporting activities that, of themselves,only improve efficiencies in data handling for the recipient bodies. Without wider diffusion to other areas of financialreporting, such as Stock Exchange filings as in the USA, these successes are of limited benefit as they produce no usablepublicly available data sets upon which analytical tools can be built. As with the majority of technological innovations, thebenefits will only become apparent when amajority of potential adoptees employ the technology and an information cascadebegins to filter down (Geroski, 2000). Regulatory bodies in the UK should make their XBRL data collections readily availableand accessible to all stakeholders and then use their communication networks to develop tools for interrogating the data.Thus, a supply-push is needed to generate a demand-pull.

The evidence here suggests that stakeholders believe that XBRL is a technological innovation that is irrelevant to them andthey have ignored its legitimacy (Dillard, Rigsby, & Goodman, 2004). Such legitimation erodes barriers (Geroski, 2000) butstakeholders do not appear to have bought in to XBRL; they are disengaged both from the process of its development and alsofrom exploring ways in which it might facilitate improvements in financial reporting, possibly due to the risk that a superiortechnology may arrive in the near future (Geroski, 2000). Collaborative involvement through connected networks and theengagement of interested parties through dialogue are a necessity to successfully diffuse XBRL (Chang & Jarvenpaa, 2005;Troshani & Doolin, 2007; Unerman & Bennett, 2004). The XBRL UK consortium has been engaged in selective collaboration

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largely within its own community and has focused on developmental issues rather than on diffusion. Its efforts to reach outbeyond its own group to engage and dialogue with the wider community has been limited and, where it has occurred, theevidence presented in this paper demonstrates it has been ineffective.

XBRLUKcouldpossibly imitate previously successful technological innovations, such asparticipatory designand soft-systemmethodologies (Mumford, 2003). Achieving success in this effort, however, is not solely a jurisdictional responsibility. Strongleadership fromXII is necessary at the global level, as well as engagement by governments and regulators which to date are theonly realplayers in thediffusionprocess.A supplier-leddiffusionprocessby ITfirmsandconsultantsofmarketing the technologyand championing its expectations has not happened. The demand pull impact of preparers has not occurred, and this has notdiffused down to a demand pull from financial reporting users. Itmay be that the nature of the technology is such that it is slow-burn and that it will continue to take a significant period of time to diffuse and current economic pressuresmay slow down thisprocess further with innovations in financial reporting taking a step back in importance.

Regulatory developments may therefore be the only realistic way that diffusion of XBRL will occur in the future. As a resultof the global financial crisis, regulators may need to handle more data, and to do so more cost effectively; regulators andlegislators such as the EU, the London Stock Exchange, CESR, IOSCO or the IASB may all take a lead in coercing stakeholders toembrace XBRL (Locke et al., 2010, p. 106). Companies House is producing a growing database of XBRL accounts and makingthis publicly available would increase the demand by users for XBRL-tagged data.29

The regulators’ involvement such as the recent ‘Working Together’ initiative with HMRC30 shows that the regulator part ofthe XBRL community has taken its own diffusion route allied to, but distinct from, the wider XBRL UK community (Mousa,2010). A supply-led route, with regulators taking the lead, is the short term way ahead utilising initatives such as HMRC'siXBRL road shows tohighlight the reporting tool. Other supply led stakeholders, such as auditors,management consultants andIT software houses, may nowneed to engage to influence organisations to change. Themanagers in organisations that producecorporate financial reporting information are the primary drivers of a demand-led change as they allocate the resourcesrequired for innovation and either facilitate or impede organisational change (Dillard et al., 2004). As a propagator group startsto adopt the new technology an endogenous pressurewill be brought to bear on other businesses tomimic their behaviour andactions. Indeed, first generation digital reporting commenced in the 1990s with a supply-led strategy by key players in thereportingmarketplace,which in turn created a demand-pull effect.Within a very short period of time this led to the ubiquity ofonline first generation digital reporting (Allam & Lymer, 2003). However, the supply-led stakeholders, as gatekeepers, need tobe assured that it will be profitable or in their interests to diffuse the technology and a supply infrastructure is needed tosupport adopters. Both theXBRL communityand regulators are outside external forces for change, but the evidenceprovided inthis survey suggests that stakeholders continue to perceive significant barriers to be overcome before they will allocate re-sources for diffusion to occur. Lack of technical know-how and the time needed to implement the technology are the mainbarriers to diffusion and, if these barriers are perceived to be too great, the mandatory requirements that are beginning tosurface may become decoupled from organisational practices, leaving XBRL as an add-on regulatory cost to businesses, ratherthan a benefit that should be embeddedwithin organisations. Organisationsmay need to be helped over these barriers as theycurrently lack the incentive to change. A small change in perceptions may be enough to create a bandwagon effect and aninformation cascadewith large ultimate consequences (Geroski, 2000). It may be that a recent slowdown in the pace of changein accounting standards and the imposition of new regulatory requirementsmay result inmore resources beingmade availableto second generation digital reporting. Thus, although XBRL has failed to diffuse to date it may yet diffuse in the future.

Various limitations are acknowledged in this research such as the small response rate (particularly amongst auditors) andthe results discussed here should be interpreted in light of this fact. Inevitably, the decision to employ four different versionsof the questionnaire meant that the likelihood of finding significant differences across the sub-sample respondent groups wasreduced. However, differences in the role of, and perceptions regarding, internet reporting across each groupwere consideredto be sufficiently important for this division to be maintained in the analysis and discussion of the data. More generally, keychanges in the regulatory requirements regarding XBRL in the UK have not occurred since undertaking this survey and as suchthe authors believe the results reflect the broad situation in the UK in the run up to HMRC’s mandated use of XBRL in April2011. A future study of diffusion since mandatory XBRL corporation tax filing would be useful to see if this has had anysignificant impact on diffusion of this technology, or stimulated wider stakeholder engagement in its development and use.

In addition, this paper only addresses the earlier stages of diffusion and a study on the implementation and change stage inthe diffusion process would be fruitful especially with an international perspective. Given that different countries are pro-gressing at different rates, and mandating use of XBRL in myriad ways, an international comparison of diffusion rates andlevels of stakeholder engagement would be revealing for comparative purposes and to explore transferable lessons learnt.

Overall, this research shows that the communication networks between government agencies, advisers such as auditorsand tax specialists, preparers and users should be strengthened such that the supply pull, and coercive focus of regulators,transcends in to an information cascade that results in the required demand pull from both preparers and users wherenormative and mimetic isomorphism can begin to happen.

29 Some concerns about data quality of early SEC filings have been expressed in the literature (e.g. see Debreceny et al. 2010) but these are well understoodand the SEC believes them to be a factor of their approach to the roll out of this mandated process rather than a fundamental issue of the approach itself touse of XBRL for financial reporting (Blaszkowsky 2010).30 Similarly in the US, the SEC’s voluntary filing, Interactive Data project and mandatory XBRL filing for large listed companies in 2010.

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Acknowledgements

The Researchers would like to thank the Association of Chartered Certified Accountants for its funding of the project onwhich this paper was based.

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