Disclosure Spontaneity and Managers’ Explanations for Performance

Durney, Michael T.; Rennekamp, Kristina M.

doi:10.2139/ssrn.3469813

Cited by 4 publications

(1 citation statement)

References 51 publications

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“…In comparison, board secretaries, legally in charge of IDDs, take direct responsibility for drafting and disclosing information and are involved directly in a firm’s decision on the disclosure form. Additionally, as chief disclosure officers and information providers, board secretaries work on narrative information rather than financial numbers (Brown et al , 2019; Durney and Rennekamp, 2021). Collectively, board secretaries can inherently determine the disclosure quality.…”

Section: Introductionmentioning

confidence: 99%

Do board secretaries influence annual report readability?

Sun

Zhu

Wang

2022

PAR

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Purpose The purpose of this study is to investigate the impact of board secretaries’ characteristics on annual report readability using an original method that evaluates the readability of Chinese characters. Design/methodology/approach The authors manually collect board secretaries’ characteristics from the China Securities Market and Accounting Research database and obtain annual reports from the China Information website. Ordinary least square regression is applied to evaluate the impact, and then robustness tests and additional regression analyses are conducted. Findings Board secretaries’ legal-professional expertise, international expertise and role duality improve annual report readability. However, their political connections are negatively associated with it. The effect of expertise (role duality) is more pronounced for firms with lower ex ante litigation risk (board secretaries with equity holdings). Furthermore, higher readability increases the compensation of board secretaries, whereas lower readability increases their turnover. Finally, annual report readability is positively related to firm performance. Research limitations/implications The authors only investigate listed firms in China from 2007 to 2017 because of the difficulties of obtaining data and text mining. Practical implications The authors provide managerial insights for regulators aiming to establish an effective governance mechanism with Chinese characteristics. First, certain requirements for board secretaries’ expertise can improve annual report readability. Further, firms can consider appointing board members or senior executives as board secretaries to enhance disclosure quality. Originality/value To the best of the authors’ knowledge, this study is the first to verify the effect of board secretaries’ characteristics on disclosure quality, especially annual report readability. Moreover, this study proposes a novel measure of annual report readability for Chinese texts.

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Section: Introductionmentioning

confidence: 99%