Comments on: Five Reasons Why Sell-Side Analysts Aren’t Demanding XBRL

By: Chris Dreyer CFA

Chris Dreyer CFA — Thu, 19 Apr 2007 23:00:25 +0000

Bob, I can only relay my personal experience: My very first impression of XBRL was made some time in 2002 or so, and then it certainly wasn't mature enough for our usage. That has changed now, and awareness of that fact is slowly creeping into the collective mind. But it's difficult to revise a first impression: XBRL may be one of the rare cases that get a second chance of making a first impression ... Incidentally, expect analysts to become more aware soon.

By: Bob Schneider

Bob Schneider — Mon, 12 Mar 2007 22:37:13 +0000

The reason I'm skeptical of the primacy of the awareness argument is that it's not a reason people usually accept in fields they are vitally involved in. Instead, their reaction to being told there is a great innovation that will substantially improve their lives is "If it's so great, what haven't I heard about it?" You would think that XBRL would have made its way into analysts' consciousness by now if they saw it as critical to their work. I do agree with Chris Dreyer, however, that the overview of XBRL he and Mike Willis wrote for Professional Investor is excellent; indeed, it's among the best I've read. I should have mentioned it in the post I wrote a couple of months ago about who I like to read in the XBRL field. (Actually, I think the only reason I didn't mention it was because I included Mike Willis among our guest bloggers, and therefore linked to his post on this blog instead of external writings. But Chris deserved recognition too.)

By: BH SMITH

BH SMITH — Thu, 08 Mar 2007 16:41:01 +0000

The bottomline is that the SEC needs XBRL to make THEIR jobs easier (faster) to review the vast amount of filings SOX regulations have brought to them. That is why it’s coming to the forefront after 5+ years of being on the fringe. Whether financial analysts or the reporting issuers want/need/like/hate XBRL is moot.

Financial analysts will continue to use their own models, spreadsheets and intangible research forces. At the least, perhaps XBRL will just help them TACTICALLY fill in their XLS data cells faster so they can spead better time on strategic research.

By: Ralf Frank MBA

Ralf Frank MBA — Tue, 06 Mar 2007 20:56:44 +0000

Those of us involved with XBRL probably spend too much time with a) the idea that financial analysts MUST be key users of XBRL and b) the idea that XBRL comes an an electronic balance sheet, p&l etc.

Financial analysts spend hours building their spreadsheets; they model companies, industries and market trends. Some of these spreadsheets have matured over years. And some even are very useful tools for forecasting future performance of a corporate. Are we seriously expecting analysts to let anybody flood their spreadsheet with data they have not had the chance to check? They love their spreadsheet, it reflects their expertise and they will guard it. Why not speak with other functions within the investment chain e.g. those tasked with stock selection or quantitative research? Typically, these functions scan large chunks of data. Why not speak to fundmanagers who receive tons of research material in paper or pdf? Speak to the buy-side if you want the sell-side to move, as they say.

Also, investment professionals love to have forward-looking statements from corporates. These do not come with balance sheets and p&l’s. Why then spend so much time on balance sheets in XBRL ? Wouldn’t a simple earnings release with say 12-15 key figures both for past periods and future periods show the beauty of XBRL and at the same time show investment professionals that their needs are well understood?

By: Dave Schmierer

Dave Schmierer — Sun, 04 Mar 2007 17:19:05 +0000

Change will come to the analyst profession from the outside, not from the inside. How many examples are there of industries that refuse to stay on the cutting edge of technological change only to find themselves struggling to adapt down the road?? In fact, much of sell-side analysis is little more than an aggregation of public data with a few formulas and some commentary mixed in. This will be a commodity product in a few years’ time. Just as blogging took the newspaper industry by storm, independent financial analysis will shape the future for sell-side analysts and XBRL will be a part of this.

By: Chris Whalen

Chris Whalen — Sun, 04 Mar 2007 16:20:51 +0000

Awareness is not the issue. Rather it is a question of relevance. Most users of MS Office never use 90% of the fuctions in that product. The assumption that users want more, interactive analytics tools is equally suspect. Yes, some users will be very interested in XBRL functionality, but the vast majority of downstream users don’t care — and probably never will. The indirect benefits of XBRL, namely accuracy and timeliness, may be as much as most end users ever care to know — if they know. The assumption that there is a function-hungry mob of end users clamoring for XBRL is one of the chief obstacles to moving this technology forward. Install it upstream for data organization, validation and transmission, then let the downstream users figure it out for themselves. A Soviet-style, top-down push approach is doomed to failure.

By: Chris Dreyer CFA

Chris Dreyer CFA — Sat, 03 Mar 2007 09:53:11 +0000

I know that blog posts containing lists of things are de rigeur, but why have five reasons when one is quite enough? That one reason is lack of awareness. You are omitting the hard facts that Jeff quoted in his presentation, namely that a recent CFA Institute survey among its members indicated that a majority of analysts never even heard about XBRL. I can tell you from personal experience that everybody in the analyst community that I tell about XBRL actually wants it. But the trouble is that currently, there are way too few instance documents available - this is where the good old chicken & egg thing comes to the fore. As for the primers you ask for, may I suggest this.