ABSTRACT
This paper investigates whether the use of extended tags in eXtensible Business Reporting Language (XBRL) filings is associated with financial analysts' forecast error and dispersion. The SEC allows firms to create customize tags in their XBRL filings to reflect firm-specific disclosures. However, customized tags may inhibit information search and reduce the usefulness of XBRL data. Since the use of extended tags is driven by the firm's reporting environment, an instrumental variables technique is employed to control for endogeneity. The results show that more extensions are related to smaller analysts' forecast error and dispersion after controlling for endogeneity. In additional analysis, extensions in footnote disclosures are found to drive this negative relationship, and extensions in the financial statements are marginally positively associated with forecast error and dispersion. This study is relevant to regulators creating policies about XBRL extensions.
