Readability of MD&amp;A Extracted from iXBRL: Computational Linguistic Approach

Hirose, Yoshitaka; Hirai, Hirohisa; Arai, Kohei

doi:10.2139/ssrn.2975765

SSRN Journal

2017

DOI: 10.2139/ssrn.2975765

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Readability of MD&A Extracted from iXBRL: Computational Linguistic Approach

Yoshitaka Hirose

Hirohisa Hirai

Kohei Arai

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Cited by 2 publications

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Has the COVID-19 Pandemic Changed Firms’ Management Discussion and Analysis Disclosure Approach? Evidence from Japan

Nakashima

2023

Journal of Forensic Accounting Research

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This study examines whether the COVID-19 pandemic changes Japanese firms’ approach to management discussion and analysis (MD&A) disclosure. Based on readability (text genericity) and tone, I investigate whether management obfuscate text during the pandemic or attempt to provide information. Additionally, I examine whether bad news is inherently difficult to read based on the difficulty of the text. During the pandemic, the tone value of MD&A disclosure is negative in fraudulent firms and more negative in nonfraudulent firms. Both types of firms attempt to communicate their company’s situation with honesty, thus satisfying the legitimacy criterion of communicative action theory. This result is not consistent with the results for Europe and the United States, where readability is lower. As a disaster-prone country, Japanese managers may find it easier to share deteriorating firm performance with investors. Nonfraudulent firms also increase textual difficulty during the pandemic, which supports ontology theory. Data Availability: Data are available from sources identified in the paper. JEL Classifications: M41; M42.

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Has the COVID-19 Pandemic Changed Firms’ Management Discussion and Analysis Disclosure Approach? Evidence from Japan

Nakashima

2023

Journal of Forensic Accounting Research

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The Effect of Voluntary IFRS Adoption on MD&A Information

Inoue,

Hirose

2024

Journal of International Accounting Research

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We analyze the textual management discussion and analysis (MD&A) information of Japanese firms that voluntarily adopted International Financial Reporting Standards (IFRS) and disclosed information in the Japanese language. We conduct a difference-in-differences analysis of firms that voluntarily adopted IFRS and those that continue to use Japanese generally accepted accounting principles. We find that the voluntary adoption of IFRS decreases the textual length but does not change the difficulty of MD&A information. The results indicate that IFRS adoption decreases the level of MD&A disclosure. However, the decrease in textual length is not observed after the 2018 MD&A regulation changes. This suggests that the negative effect of IFRS adoption is offset by the positive effect of the regulation change. This study is unlike previous research as it contributes to international accounting literature by analyzing financial reporting in a non-English language, viz. Japanese, which is, technically, a very difficult language. Data Availability: All financial data and some textual data used in this study are available from commercial providers (NEEDS–FinancialQUEST2.0, NEEDS–MT Executive (Yakuin), and eol), and the other textual data are available from a governmental public source (EDINET). JEL Classifications: M41; M48; G14.

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Readability of MD&A Extracted from iXBRL: Computational Linguistic Approach

Cited by 2 publications

References 6 publications

Has the COVID-19 Pandemic Changed Firms’ Management Discussion and Analysis Disclosure Approach? Evidence from Japan

Has the COVID-19 Pandemic Changed Firms’ Management Discussion and Analysis Disclosure Approach? Evidence from Japan

The Effect of Voluntary IFRS Adoption on MD&A Information

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