The application of a taxonomy on a “minimum basis” (individual extensions permitted) preserves specific information, but causes a potential loss of data comparability.Ībstract In spite the important of the global accounting convergence of IFRS in firms operations of various countries in terms of globalization of financial markets, standardizing the diverse accounting policies around the globe and the facilitation of high quality, transparent and comparable information in financial statements. The application of a taxonomy on a “blind basis” (extensions not permitted) leads not only to the full comparability of financial data but also to a loss of idiosyncratic information. ![]() We discuss the potential effects of taxonomy application on the representation of financial information. Conversely, in the US, XBRL is required through the application of a standard taxonomy (the US GAAP Taxonomy), along with the ability to define individual extensions to be submitted to the SEC. In Italy, XBRL is required through the application of a standard taxonomy (the Italian GAAP Taxonomy), without the ability to create and submit taxonomy extensions. We then examine the XBRL implementation models adopted in two countries: Italy and the US. ![]() We first develop a conceptual framework for understanding which factors may affect the adoption of XBRL and, in turn, standardise or customise financial reporting. ![]() In this paper, we discuss the dual power of XBRL to standardise and/or accommodate firms’ financial reporting practices.
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