No. 248: The Proprietary Cost of Machine-Readable Financial Reporting: Evidence from ESEF

The European Single Electronic Format (ESEF) requires issuers to tag annual reports with the IFRS Taxonomy and to anchor each firm-authored statement concept extension to a standard IFRS concept since 2020. This anchoring requirement distinguishes the European regime from the U.S. XBRL setting. Using 6,496 ESEF filings from 27 EU and EEA countries over 2020 to 2024, we study corporate disclosure informativeness and proprietary cost implications under this regime. Disclosure-period return volatility rises more with earnings news in filings that carry more anchored statement extensions, consistent with these firm-specific extensions being informative. More profitable firms use fewer anchored statement extensions compared to their industry peers, consistent with high economic-rent firms reducing their proprietary disclosure costs. The results are stronger where national regulatory quality is higher, where the national filing infrastructure makes the report machine-accessible, and where the firm is more exposed to China. As the European Single Access Point (ESAP) is scheduled to make ESEF annual reports centrally accessible across the EU from July 2027, our evidence on the proprietary costs of disclosure speaks directly to the policy implications of machine-readable financial reports in the EU.