Are longer annual reports less readable? Evidence from foreign firms listed on the United States Stock Exchanges
Tóm tắt: 60
| 
PDF: 64 
##plugins.themes.academic_pro.article.main##
Author
Từ khóa:
Readability
Annual reports
Fog Index
Length of reports
Tóm tắt
This study examines whether longer annual reports are less readable. Using the sample of 20-F forms published by foreign firms listed on the United States Stock Exchanges, we find a significantly negative association between the length of annual reports and readability. This result suggests that longer annual reports are not less readable. The change in writing styles with shorter sentences, which is better complied with regulations of the US Securities and Exchange Commission (SEC) on disclosure, is considered the main reason for longer but more readable annual reports. We also raise awareness when employing the length of annual reports as the proxy of readability in research on the complexity of annual reports.
Tài liệu tham khảo
-
[1] SEC, “What we do”, gov, 2013, https://www.sec.gov/Article/whatwedo.html, Accessed 1 October 2020.
[2] Bloomfield, R. J., “The “incomplete revelation hypothesis” and financial reporting”, Accounting Horizons, Vol. 16(3), 2002, 233–243.
[3] Bonsall, S. B. V, Leone, A. J., & Miller, B. P., “A plain English measure of financial reporting readability”, Journal of Accounting and Economics, Vol. 63(2–3), 2017, 329–357.
[4] Lehavy, R., Li, F., & Merkley, K., “The effect of annual report readability on analyst following and the properties of their earnings forecasts”, Accounting Review, Vol. 86(3), 2011, 1087–1115.
[5] Li, F., “Annual report readability, current earnings, and earnings persistence”, Journal of Accounting and Economics, Vol. 45(2–3), 2008, 221–247.
[6] Lundholm, R. J., Rogo, R., & Zhang, J. L., “Restoring the tower of Babel: How foreign firms communicate with U.S. Investors”, Accounting Review, Vol. 89(4), 2014, 1453–1485.
[7] Miller, B. P., “The effects of reporting complexity on small and large investor trading”, The Accounting Review, Vol. 85(5), 2010, 1227–1253.
[8] Cazier, R., & Pfeiffer, R., “Why are 10-K filings so long?” Accounting Horizons, Vol. 30(1), 2016, 1–21.
[9] Lee, Y-J., “The effect of quarterly report readability on information efficiency of stock prices” Contemporary Accounting Research, Vol. 29(4), 2012, 1137–1170.
[10] Guay, W., Samuels, D., & Taylor, D., “Guiding through the fog: Financial statement complexity and voluntary disclosure”, Journal of Accounting and Economics, Vol. 62(2), 2012, 234–269.
[11] You, H., & Zhang, X., “Financial reporting complexity and investor underreaction to 10-k information”, Review of Accounting Studies, Vol. 14(4), 2009, 559–586.
[12] Cheung, E., & Lau, J., “Readability of notes to the financial statements and the adoption of IFRS”, Australian Accounting Review, Vol. 26(2), 2016, 162–176.
[13] Loughran, T., & McDonald, B., “Textual analysis in accounting and finance: A survey”, Journal of Accounting Research, Vol. 54(4), 2016, 1187–1230.
[14] Loughran, T., & McDonald, B., “Regulation and financial disclosure: The impact of plain English”, Journal of Regulatory Economics, Vol. 45(1), 2014a, 93–113.
[15] Lang, M., & Stice-Lawrence, L., “Textual analysis and international financial reporting: Large sample evidence”, Journal of Accounting and Economics, 60(2–3), 2015,110–135.
[16] Loughran, T., & McDonald, B., “Measuring readability in financial disclosures”, Journal of Finance, Vol. 69(4), 2014b,1643–1671.
[17] Smith, J. E., & Smith, N. P., “Readability: A measure of the performance of the communication function of financial reporting”, The Accounting Review, Vol. 46(3), 1971, 552–561.
[18] Filzen, J. J., & Schutte, M. G., “Comovement, financial reporting complexity, and information markets: evidence from the effect of changes in 10-Q lengths on internet search volumes and peer correlations”, North American Journal of Economics and Finance, Vol. 39, 2017, 19–37.
[19] KPMG, “Disclosure overload and complexity: Hidden in plain sight”, kpmg.com, 2012, https://www.scribd.com/document/
335028195/Disclosure-Overload-Complexity, Accessed 20 October 2020.
[20] De Franco, G., Hope, O. K., Vyas, D., & Zhou, Y., “Analyst report readability”, Contemporary Accounting Research, Vol. 32(1), 2015, 76–104.
[21] Courtis, J. K., “An investigation into annual report readability and corporate risk-return relationships”, Accounting and Business Research, Vol. 16(64), 1986, 285–294.
[22] Subramanian, R., Insley, R. G., & Blackwell, R. D., “Performance and readability: A comparison of annual reports of profitable and unprofitable corporations”, Journal of Business Communication, Vol. 30(1), 1993, 49–61.
[23] Aymen, A., Mhamed, L., & Badreddine, M., “Guiding through the Fog: Does annual report readability reveal earnings management?” Research in International Business and Finance, Vol. 38, 2016, 509–516.
[24] Callen, J. L., Khan, M., & Lu, H., “Accounting quality, stock price delay, and future stock returns”, Contemporary Accounting Research, Vol. 30(1), 2013, 269–295.
[25] Lawrence, A., “Individual investors and financial disclosure”, Journal of Accounting and Economics, Vol. 56(1), 2013, 130–147.
[26] SEC, “A plain English Handbook: How to create clear SEC disclosure”, SEC.gov, 1998b, https://www.sec.gov/pdf/handbook.pdf Accessed 15 October 2020.
[27] SEC, “Staff Legal Bulletin No. 7. Plain English disclosure”, SEC.gov, 1998a, https://www.sec.gov/interps/legal/slbcf7.htm Accessed 1 October 2020.
[28] Bonsall, S. B., & Miller, B. P., “The impact of narrative disclosure readability on bond ratings and the cost of debt”, Review of Accounting Studies, 22(2), 2017, 608-643.
[29] Boubaker, S., Gounopoulos, D., & Rjiba, H., “Annual report readability and stock liquidity”, Financial Markets, Institutions & Instruments, 28(2), 2019, 159-186.
[30] Nguyen, P. T. T., & Kimura, A. “How plain English use affects the length of annual reports: Evidence from the annual reports of foreign firms listed on the US stock exchange”, Journal of Accounting and Public Policy, Vol. 39(6), 2020, 106773.
[31] Klare, George R., “The Measurement of Readability”, Iowa State University Press, Ames, Iowa, 1963.
[32] Mc Laughlin, G. H., “SMOG grading-a new readability formula”, Journal of reading, Vol.12(8), 1969, 639-646.
[33] Davison, A., & Kantor, R. N. “On the failure of readability formulas to define readable texts: A case study from adaptations”, Reading research quarterly, 1982,187-209.
Xem thêm
##plugins.themes.academic_pro.article.sidebar##
Đã Xuất bản
Jun 30, 2022
Download
Cách trích dẫn
Nguyen Thi Thuy Phuong, Nguyen Thanh Huong. “Are Longer Annual Reports Less Readable? Evidence from Foreign Firms Listed on the United States Stock Exchanges”. Tạp Chí Khoa học Và Công nghệ - Đại học Đà Nẵng, vol 20, số p.h 6.1, Tháng Sáu 2022, tr 58-63, doi:10.31130/ud-jst.2022.095E.
