This paper investigates the association between the mandatory adoption of XBRL (eXtensible Business Reporting Language) and mutual funds flows. Based on a sample from mutual funds in China for the period from 2007 to 2013, we provide empirical evidence on the decreased agency costs with the role of XBRL financial reporting standards to reduce information asymmetry. Our results show that the XBRL adoption is significantly negatively associated with mutual funds flows. Our results further indicate that the mandatory adoption of XBRL may lead to more reduction of mutual funds flows for firms with poorer corporate governance than those with better corporate governance. Overall, our findings suggest that information symmetry and transparency is vital to tackle the issue of agency costs in the emerging markets and shed light on the role played by XBRL as a global standard to facilitate business information supply chain around the world.
CAFR and JAFF Joint Conference 2015, Hong Kong Polytech University, pp.1-10