The Effect of XBRL Adoption on the Investors’ Trading Behavior in Indonesia Stock Exchange

Abstract

This research aimed to examine the effect of XBRL (Extensible Business Reporting Language) adoption on investors' trading behavior in Indonesia Stock Exchange which was reflected in the frequency of trading on Indonesia Stock Exchange. By using a number of 34 banking issuers taken randomly from a number of 81 banking issuers listed in the Indonesia Stock Exchange in 2014 and 2016, and using one way ANOVA analysis method, for t-test, to see the effect of pre and post XBRL adoption on trading shares frequencies, and also added control variables ROA, SIZE and dividend ratios to the effect of pre XBRL adoption. The results revealed that when post XBRL adoption, the stock trading frequency and control Variable ROA (Return on Assets) did not have any significant changes during the implementation of XBRL, this was due to the sample of financial report data taken from post XBRL, i.e., the 2016 financial data, while the implementation of XBRL only started in 2015, so the implementation of XBRL had not an effective effect on investors, but the other control variable, i.e., SIZE had significant changes during the post XBRL adoption, this implies the effectiveness of XBRL adoption, the increase in the investor's turnover ratio in small companies is more pronounced and economically significant than the large companies. Small companies respond to the existence of XBRL, the response occurs because there is an additional convenience obtained to get more transparent and relevant information to the expected investment decision making. The DEVIDEN as control variable had any significant change during the post XBRL adoption, this indicates that the investors' response to XBRL will increase the frequency of their trading and affect the possibility of obtaining greater dividends.

Corporate Governance and Value Relevance in Indonesia Manufacturing Companies

“…The results show that Hypothesis 2 can be accepted, but with a negative effect that is contrary to the existing theory. The results of this study are not in line with Razak's (2019) research indicating that size affects the XBRL response, meaning that small companies respond to the existence of XBRL. Masrifa's research (2016) shows a significant effect on firm value, that the greater the size of the company, the faster the turnover of assets (the more effective the company is in generating profits from the use of its assets) and a positive signal for investors that the better the company's performance will increase investors' interest in investing, and in the end, the value of the company will increase.…”

“…Muchlis (2019) shows that XBRL does not make financial reports more informative. Meanwhile, Razak (2019) found that the frequency of stock trading and ROA as control variables did not change when XBRL was implemented, while the implementation of XBRL was only carried out in 2015. However, size and dividends changed during the post-XBRL period.…”

“…Companies with high-profit levels provide positive signals for rational investors so that they will invest their funds in companies that have a high level of asset use efficiency because the profits obtained are also high. Razak (2019) states that ROA testing for pre and post-XBRL adoption indicates that the company's ROA has not changed at the time of XBRL adoption, there has been no positive response from investors. Zhang's research (2000) predicts that, with companies with low efficiency, the book value of equity is better able to explain the value of equity than earnings; this is consistent with the findings by Barth et al (1998) that point to companies experiencing a decline in financial health.…”