Effects of the SEC's XBRL mandate on financial reporting comparability

• We find that there is a decline in comparability after the implementation of the XBRL mandate in the US
• We find that financial statement comparability is negatively associated with the use of extension taxonomies
• We find that financial statement comparability has declined more for line items involving greater accounting discretion

In 2009, the US Securities and Exchange Commission (SEC) made it mandatory for firms to file interactive data using XBRL along with their 10-K and 10-Q reports on EDGAR. There was an initial three-year phase-in period, with the first (last) phase covering the largest (smallest) firms in the US capital markets. We examine the implications of the SEC's XBRL mandate for financial statement comparability. Our results indicate that financial statement comparability declined in the initial years after the mandate. We also find that firms that use more company-specific extension taxonomies (companies are allowed to use their own taxonomies when the standard taxonomy provided by the Financial Accounting Standards Board (FASB) is inadequate) have lower financial statement comparability in the post-mandate years. Finally, we document that the level of discretion involved in measuring particular financial statement line items is related to the post-mandate change in comparability — we find that selling, general and administrative expense (SG&A) comparability declined after the mandate, while depreciation comparability did not change.