Q4 Blog

The XBRL-US developer Technology Workshop & Summit was recently held in Santa, Clara, CA.   The event was hosted by Hitachi Data Systems and brought together XML developers and other professionals from around the world who are involved with implementing XBRL reporting standards.

The 2 ½ day event consisted of discussion sessions and workshops to educate and generate ideas on solving issues in XBRL development such as rendering, versioning, data quality and validation.

In an otherwise very tech-centric conference, Q4’s Co-founder and CEO, Darrell Heaps provided some interesting ways that companies can make XBRL content discoverable, shareable and viral to move seamlessly through the financial web by key stakeholders such as analysts and investors.

What follows are the salient points from his presentation ”IR Websites and XBRL Rendering” from the session: Best Practices and Current Approaches for Rendering XBRL in which panelists discussed current approaches and emerging practices for preparing and rendering XBRL content.

Other Speakers included:
Diane Mueller, VP, XBRL Development, JustSystems
Masatomo Goto, Manager, Fujitsu
Ted Stavropoulos, Director of Business Development, Rivet Software

Before I get into the details, here is a link to a recent blog which provides a broad overview of why XBRL is relevant to IROs and the requirements for adoption, a broad definition and the implications of using it to help improve processes.

IR WEBSITES AND THE SOCIAL FINANCIAL WEB

Some emerging trends in the market over time provide compelling evidence to support providing users with the tools to make XBRL filings easier to find, download and analyze.

KEY TRENDS

1. The IR website is a primary channel of communicating and is how companies are interacting with the market.  For example, a study by Rivel Research states that 75% of pro investors use corporate websites weekly if not daily.
2. Increased use of the web and social media to communicate with key audiences.  For example, a Nielsen online report issued in March 2009, states that 67% of the global online population uses social networks and blogs.
3. Decline in the number of sell side analysts are helping to push coverage and equity research to the social web.  As such there has been an emergence in financial blogs such as Seeking Alpha, StockTwits and wikinvest.  Companies should pay attention to these sites and review how they are packaging their information to make it easier for them to be covered by these new channels.

One interesting thing to note about Wikinvest is that while it is not yet based on XBRL, they are leveraging interactive data features.  For example, they have charts and other data presentations each as its’ own atomized piece of content.  Packaging information so it is easier to share, disseminate and embed enables downstream content providers such as blogs to pick up the information and include it in their reports.

INVESTOR RELATIONS ADOPTION

Some observations and recent comments about the filing of XBRL statements for reporting periods ending after June 15th indicate that companies are only doing the minimum to be compliant under the SEC mandate.

For example, In a recent IR Magazine blog, Neil Hannon, senior XBRL consultant at Cambridge, Massachusetts-based Gilbane Group was quoted as saying “Companies are doing the bare minimum with XBRL on their websites. ‘They’re complying with the SEC rules by putting their XBRL statements on the web but they aren’t giving users any tools to play around with them.”

It goes on to quote an IRO who feels that “putting more sophisticated XBRL tools…could benefit retail investors but he has no plans to do so because the company is over 90% institutionally held.”

Adding to the sentiment of Neil Hannon, the current solutions being offered to companies right now don’t have the XBRL content connected to the IR website and instead are treating it as a pop-up.  Not having the content anchored in the IR website decreases the “discoverability” of your company by diminishing the ability of search engines to index the content and help you be found by new investors.

It has obviously taken a lot of work to get XBRL to this point.  One can view the unfolding of XBRL in three phases:

1. Creation of taxonomy
2. Compliance
3. Competition

However, it seems that there has not been a lot of thought to how it will evolve and the benefits of catering to key audiences such as investors, analysts and the financial media by making the content viral and shareable across the financial web.

We are in the compliance phase as the deadline for the 500 largest companies to produce their first official XBRL statements was August 10th (which is the deadline for 10-Qs from calendar-year filers, or within their one-time-only 30-day grace period).

In order to move from a straight “compliance” mentality, IROs need to see how the data can be used in innovative ways to help tell their investment story and differentiate themselves from their peers.   At a very high level, the XBRL community needs to demonstrate to the IR community that using XBRL as a strategic tool will help them be more competitive.

Right now, the focus will likely be on reviewing XBRL statements filed to-date.  As issuers get more savvy and nail down the straight compliance aspects, they will hopefully begin to assess how they can make the data easier to render for their key audiences.

OUR VIEW OF WHAT’S NEEDED

In speaking with the investment community and in particular our conversations with companies about the many benefits of social media and how it can enhance communications with their investors and the investment community at large, we offer the following strategic concepts for rendering XBRL content for the social web:

1. Rendered XBRL filings should be connected to the “source of authority” (SEC database): In order for XBRL data to be easily shared and disseminated throughout the social web it needs to remain connected to the “source of authority” in this case, being the SEC database.  In doing so, this will help ensure the data is validated and trusted as it is shared, embedded and republished across the web.  In addition to this, our view is the filing should also have a permanent url connected to IR website. Again, so that it can be linked to from various external sources. Many of the early solutions provide the XBRL as a static “copy” of the SEC filing and display this in a pop-up alongside other filings. This approach disconnects the filings from the source of authority and inhibits the ability of this content to maintain it’s integrity while being shared and republished.
2. Content should be discoverable:  XBRL content should be integrated into the IR website, not simply linked to a pop-up alongside all of the other filings.  Doing so improves the content’s discoverability via search engines and exposes the financial data to the web at large. Giving investors the ability to use search engines to search for “XYZ corp’s income statement” will expose the value of XBRL to the web and provide the ability for companies to attract new investors.
3. Charts, Graphs, Visualization:  The use of charts, graphs and other visual elements is key to helping the company “tell it’s story through data”.  These elements enhance the investor’s experience by allowing key financial information to be quickly extracted and understood.  By providing visual elements to the rendering of XBRL it will help both investors and IROs experience the strategic value of interactive data.

Of course the above three elements are only the beginning. XBRL represents a massive opportunity and challenge for the market.  The key aspect as this point of XBRL’s evolution is for the market to start focusing on the true value it can provide to investors and on how companies and their IRO’s can use XBRL to provide greater insight into their value and telling their investment story.

Related posts:

1. XBRL mandate is coming
2. Summer ‘09 Preview bring social media and xbrl to IR websites
3. XBRL continues to expand
4. Q4 Web Systems and Virtua Research Partner to Launch New Standard of Rendering Financial Data
5. Canadian securities regulators launch XBRL voluntary filing program

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XBRL IR 2.0, IR Websites, SEC, XBRL