Proximity to broad bond rating change and annual report readability

Bradley, Wray; Sun, Li

doi:10.1108/ara-06-2020-0096

Cited by 4 publications

(5 citation statements)

References 32 publications

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“…Alternately, board size is negatively associated with FleschRead for the banking sector, indicating few members are associated with readable reports. Low market to book value ratio is associated with better readability of banks (Column (2)) which is consistent with the findings of US companies (Bradley and Sun, 2021). Panel B shows the results of FleshKinkaid as the dependent variable, which requires the inverse relationship to reflect better readability.…”

Section: Resultssupporting

confidence: 88%

Does intellectual capital and corporate governance have an impact on annual report readability? Evidence from an emerging market

Dalwai

Mohammadi

Chugh

et al. 2021

IJOEM

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PurposeThis study examines the impact of intellectual capital efficiency and corporate governance mechanisms on the annual report readability of Oman's financial sector companies.Design/methodology/approachThe study uses a sample of 150 firm-year observations of listed financial sector companies in the Muscat Securities Market, Oman, from 2014 to 2018. Flesch Reading ease and Flesch Kinkaid Index are used as proxies for annual report readability. As part of sensitivity analysis, the study also uses the natural logarithm of annual report pages as alternative readability measures. The investigation is conducted using random effects regression analysis and supported with system GMM estimation for robustness.FindingsThe findings of this study demonstrate a decrease in intellectual capital efficiency associated with better readability of annual reports for the financial sector firms. Alternatively, banks report a positive association of intellectual capital efficiency with the Flesch Reading ease score of the annual report. The structural capital and capital employed efficiency are also found to be negatively associated with annual report readability. Corporate governance mechanisms such as dispersed ownership and audit committee size also result in easy-to-read annual reports that support agency theory.Research limitations/implicationsThe research was conducted for financial firms of Oman, and thereby the findings can be generalized to the financial sector of countries with similar settings, such as the Gulf Cooperation Council (GCC) region.Practical implicationsThe policy implications arising from this study suggest a strengthening of the intellectual capital efficiency and corporate governance mechanisms to improve the readability of the firms and thereby increase investor confidence.Originality/valueThis paper's uniqueness is in the model used to investigate the impact of intellectual capital efficiency and corporate governance mechanisms on the annual report readability of an emerging market.

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Section: Resultssupporting

confidence: 88%

Does intellectual capital and corporate governance have an impact on annual report readability? Evidence from an emerging market

Dalwai

Mohammadi

Chugh

et al. 2021

IJOEM

View full text Add to dashboard Cite

show abstract

“…The flagging hypothesis also stipulates that the desire to provide more information motivates firms, sometimes more than necessary (Oyelere et al, 2003). Studies examined the impact of financial statement complexity as well as disclosures in accordance with previous evidence and found that managers divulge to reduce the negative effects of complex financial statements on the information environment (Bradley and Sun, 2021;Guay et al, 2016). Henry (2006) suggests that annual reports are less readable when a company performs poorly.…”

Section: Literature Review and Hypothesis Development 21 Tone Complex...mentioning

confidence: 89%

“…, 2003). Studies examined the impact of financial statement complexity as well as disclosures in accordance with previous evidence and found that managers divulge to reduce the negative effects of complex financial statements on the information environment (Bradley and Sun, 2021; Guay et al. , 2016).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 89%

Tone complexity and the cost of debt retrospective data from the USA

Bendriouch

Jabbouri²,

Satt³

et al. 2022

RBF

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PurposeThis paper explores the impact of tone complexity on the cost of debt in the USA.Design/methodology/approachA sampling from 692 publicly nonfinancial-traded companies in the USA is employed over the period between 2010 and 2018. Generalized methods of moments (GMM) model is implemented to examine the impact of tone complexity on the cost of debt and its implications upon creditors and users.FindingsThe findings show that high-tone complexity is associated with a greater cost of debt. The use of a more complex tone in a company's annual reports has been shown to influence creditors' perceptions of risk.Originality/valueThis research pursues innovation by examining how creditors can use the tone complexity of annual report to assess the level of information asymmetry and estimate the required rate of return accordingly.

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“…The Bog index, developed by Bonsall et al , 2017, is a standard and comprehensive measure for readability (Bradley and Sun, 2021). This index captures the plain English writing as recommended by linguistics experts and it is calculated as follows: …”

Section: Methodsmentioning

confidence: 99%

“…Thus, we have chosen the Bog index, a common measure of writing clarity that overcomes the major criticism of the former. The Bog index, developed by Bonsall et al, 2017, is a standard and comprehensive measure for readability (Bradley and Sun, 2021). This index captures the plain English writing as recommended by linguistics experts and it is calculated as follows:…”

Section: Research Design 31 Sample Selectionmentioning

confidence: 99%

Through the rhetoric art: CEO incentives in sustainability sensitive industries

Mnif

Kchaou

2021

MEDAR

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Purpose This paper aims to explore the relationship between the readability of sustainability reports and chief executive officer (CEO) attributes, comprising monetary, non-monetary incentives and personal characteristics. Design/methodology/approach The study is based on an international sample of companies operating in sustainability-sensitive industries during 2016–2018. Findings The results prove that CEO monetary incentives, as well as CEO non-monetary incentives, negatively influence the readability of sustainability reports, revealed in a positive relationship with readability indexes, by providing reports with greater reading difficulty. Additionally, this study shows evidence about the relation of complementarity between these incentives. Other CEO characteristics have no significant effect on the readability of sustainability reports. Originality/value This research sheds the light on the role of CEO incentives in obfuscating sustainability information to portray the company, operating in sustainability-sensitive industries, in a favorable image.

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Proximity to broad bond rating change and annual report readability

Cited by 4 publications

References 32 publications

Does intellectual capital and corporate governance have an impact on annual report readability? Evidence from an emerging market

Does intellectual capital and corporate governance have an impact on annual report readability? Evidence from an emerging market

Tone complexity and the cost of debt retrospective data from the USA

Through the rhetoric art: CEO incentives in sustainability sensitive industries

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