The effect of thematic structure on the variability of annual report readability

The effect of thematic structure on the variability of annual report readability The readability of annual reports has been the focus of extensive prior research. However, the extent of readability variability has only recently received specific attention. In response to a perceived need for further research into this area, an analysis of 60 UK chairman’s statements was conducted in order to test for possible determinants of readability variability. Results show the introduction to the chairman’s statement is systematically easier to read than other parts of the chairman’s statement. No evidence was found to support prior research that, rather than present accounting narratives objectively, managers use readability variability to emphasise good news and obfuscate bad news. The thematic structures within the chairman’s statement were investigated to explore whether they were responsible for systematic patterns in the variability of annual report readability. Findings indicate that thematic structure of the chairman’s statement is indeed a key driver of the variability of annual report readability. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting, Auditing & Accountability Journal Emerald Publishing

The effect of thematic structure on the variability of annual report readability

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Publisher
Emerald Publishing
Copyright
Copyright © 2001 MCB UP Ltd. All rights reserved.
ISSN
0951-3574
D.O.I.
10.1108/09513570110399890
Publisher site
See Article on Publisher Site

Abstract

The readability of annual reports has been the focus of extensive prior research. However, the extent of readability variability has only recently received specific attention. In response to a perceived need for further research into this area, an analysis of 60 UK chairman’s statements was conducted in order to test for possible determinants of readability variability. Results show the introduction to the chairman’s statement is systematically easier to read than other parts of the chairman’s statement. No evidence was found to support prior research that, rather than present accounting narratives objectively, managers use readability variability to emphasise good news and obfuscate bad news. The thematic structures within the chairman’s statement were investigated to explore whether they were responsible for systematic patterns in the variability of annual report readability. Findings indicate that thematic structure of the chairman’s statement is indeed a key driver of the variability of annual report readability.

Journal

Accounting, Auditing & Accountability JournalEmerald Publishing

Published: Aug 1, 2001

Keywords: Accounting; Narratives; Reading; Company reports

References

  • Annual report readability variability: tests of the obfuscation hypothesis
    Courtis, J.K.
  • Readability and understandability: different measures of the textual complexity of accounting narrative
    Smith, M.; Taffler, R.J.
  • The incremental effect of narrative accounting information in corporate annual reports
    Smith, M.; Taffler, R.J.
  • Assessing the information content of narrative disclosures in explaining bankruptcy
    Tennyson, B.M.; Ingram, R.W.; Dugan, M.T.

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