The Effect of Voluntary XBRL Adoption on Audit Fees: Evidence from Belgium

Abstract

The European Parliament has voted for the new Transparency Directive that calls for the mandatory preparation of annual financial reports in a single digital format from January 1, 2020 such as eXtensible Business Reporting Language (XBRL). This paper examines whether the adoption of XBRL is associated with lower costs of audit in Belgium. Our results show that XBRL is negatively related to audit fees. The empirical findings suggest also that the association effect is stronger for larger firms that have sufficient resources and expertise to properly implement the technology.