Every day, investment professionals parse through corporate financial reports, download selected numbers, plug those numbers into their calculations, and then buy, sell, or hold based on the results. For decades, large data aggregators have provided corporate financial data to meet investment professionals' need for numbers. Typically, a data vendor employs many analysts to read financial reports and classify the line items according to the vendor's Chart of Accounts.
Increasingly, these vendors have begun using technological tools to "read" the financial reports and classify certain numbers automatically, reserving analysts' time and attention for more difficult classifications. However, even with the introduction of automation, these vendors still formulate their classifications, whether machine- or human-generated. These data vendors' main product is their interpretation of what the numbers in a financial statement mean.
Meet XBRL - the Global Standard for Digital Reporting
In 2009, the Securities and Exchange Commission made a crucial change. The SEC mandated that U.S. public companies file their financial statements in the eXtensible Business Reporting Language (XBRL) format. Under this requirement, corporate filers turn their financial statements into XBRL documents or instances. In an XBRL instance, filers themselves use electronic tags to individually classify every number on the face of the financial statements and from footnotes. The SEC publishes every XBRL instance on its website within minutes after it is filed.
There is No Longer the Need for Investment Professionals to Rely on Data Vendors’ Interpretations
XBRL instances provide all of the classifications needed—coming directly from the filer, rather than from a vendor. Because all U.S. public companies now report their financial statements as XBRL instances, the public can access these filers’ own financial classifications. There is no longer any need for investment professionals to rely on vendors’ interpretations.
Since 2014, idaciti has been perfecting a process to harvest every XBRL instance, extract every electronic tag chosen by the filer, and provide this filer-classified financial data to investment professionals for easy use.
When you choose a financial data provider, you are choosing between two basic options. Do you want data from financial statements and footnotes classified by the filer—straight from the most knowledgeable source—or do you choose a vendor’s interpretations?