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This edition of Data Transparency News reports on a new partnership between the Coalition and the Object Management Group (OMG) to pursue machine-readable regulation; the Coalition's presentation to Republican convention delegates; and an academic study demonstrating that companies reporting their financial statements in XBRL enjoy a lower average cost of equity capital.

Data Transparency News
OMG

Coalition co-founds regulatory task force with OMG

 

On August 28, the Coalition and the Object Management Group (OMG), the worldwide standards consortium,  announced the formation of a new task force to identify and promote standardization opportunities in federal regulation. SMART Regulation - which refers to the incorporation of standardized identifiers, interchange formats, data models, and vocabularies in regulatory text and disclosures - can transform government and the economy. By incorporating standards in regulatory text and disclosures, regulators can clarify their rules, facilitate cheaper compliance, sharpen their enforcement capabilities, and move toward greater transparency.

The SMART Regulation Task Force will meet regularly to collaborate on the needs and challenges of standardization and introduce these concepts to regulators, Congress, and regulated entities. Participation is open to members of the Data Transparency Coalition and OMG.

The task force will hold a kick-off meeting on Tuesday, Sept. 11, at OMG's technical meeting in Jacksonville, FL.
Data Transparency Coalition

Coalition executive director addresses Republican convention delegates

Americans for Tax Reform invited the Coalition to provide an update on federal spending transparency at its "National Center Right Meeting," a policy-oriented event in Tampa, FL, coinciding with the Republican National Convention. Americans for Tax Reform was one of the earliest supporters of the DATA Act.

Executive Director Hudson Hollister addressed the ATR gathering on Aug. 29. Hollister explained the need for the federal government to make recipient filings and transactional data fully transparent through data standardization. Accurate, searchable, complete spending information will be essential to future policy decisions, but the current system does not deliver it. Hollister also pointed out that the DATA Act has attracted support from across the political spectrum; groups identifying with both the political right and left have endorsed it. The DATA Act is one of the only ideas that unites "everyone from Grover Norquist to Ralph Nader to Microsoft," Hollister said.

The Coalition hopes to continue building support for the DATA Act among fiscal policy activists on both sides.


XBRL

Academic research: Financial reporting in XBRL lowers the cost of equity capital

In early 2009, the U.S. Securities and Exchange Commission began requiring U.S. public issuers to submit their financial statements in the eXtensible Business Reporting Language (XBRL). The XBRL filing requirement is the most ambitious data transparency project in history. It applies to every public company in the world's largest economy. The taxonomy of XBRL tags that is used for U.S. financial statements - maintained by the Financial Accounting Standards Board (FASB) - includes more than 12,000 unique accounting concepts.

The SEC introduced the XBRL filing requirement, in part, in hopes of reducing the cost to investors and analysts of processing corporate finanical data. Cheaper data processing would allow analysts to cover a greater range of companies, reducing the companies' cost of capital, and would speed the incorporation of financial results into stock price. For the first time, academic research suggests the SEC was right. A paper released in August by the business school of the National University of Singapore reports that a sample of 2,302 U.S. companies saw an average reduction in the cost of equity capital of 60 basis points after starting to report in XBRL.

The SEC's conversion to XBRL is incomplete. Companies still submit crucial information in formats that are not machine-readable. Registration statements, prospectuses, earnings releases, ownership structure filings, officer and director lists, executive compensation, and other disclosures are still in plain text. Investors and analysts cannot incorporate such information into their models without expensive data processing. The Coalition supports legislation that would commit the SEC to a fully electronic securities disclosure system.






Data Transparency Coalition


Members

Executive
Teradata Corporation

Regular
IPHIX
Level One Technologies
SAP

Trade Association
XBRL US

Individual and Nonprofit
Jay Fohs, MarkLogic
Michael Doane, MarkLogic
Isaiah Goodall, Elder Research
Mark Klinski
Joseph Kull, PwC
Maryland Association of CPAs

Advisors

Mike Atkin
Greg Bateman
Gila Bronner
Earl Devaney
Eric Gillespie
Jim Harper
Beth Noveck
Campbell Pryde

About Us

The Data Transparency Coalition is the only trade association that advocates data reform for the U.S. federal government. The Coalition brings together companies, nonprofit organizations, and individuals to support policies that require federal agencies to publish their data online, using standardized, machine-readable, nonproprietary identifiers and markup languages.

Member Spotlight

Founded in 2004, IPHIX is a leading provider of consulting and training services for adoption and use of XBRL, XBRL GL, and other XML-based standards.

As an advisor to financial regulators, IPHIX is playing a key role in the national projects that are trail-blazing XBRL adoption. These include the Standard Business Reporting (SBR) programs of Australia and the Netherlands, as well as reporting regimes of the Bermuda Monetary Authority.
 
IPHIX’s knowhow is bolstered by the work of founder Gianluca Garbellotto, an XBRL pioneer and a leading authority. His positions of leadership in XBRL International, the standards-settings body of XBRL, and the financial community provide him with exceptional insight on both the standard’s potential and its limitations.
 
In addition to its current efforts to raise awareness on the benefits of adoption of open standards by the US Federal Government, IPHIX is now launching the Deeply Embedded XBRL Toolkit (DEXT) initiative, designed to promote and enable adoption of XBRL for internal use by companies and businesses. Given its long experience and knowledge of the field, IPHIX is uniquely positioned to help companies and Governments that seek to leverage their investment in XBRL for external reporting by adopting internal reporting capabilities as well.
 

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