The Effect of Organizational Complexity on Earnings Forecasting Behavior

Jennings, Jared N.; Seo, Hojun; Tanlu, Lloyd; Foster, Michael G.

doi:10.2139/ssrn.2130119

Cited by 31 publications

(54 citation statements)

References 80 publications

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“…Jennings, Stoumbos, and Tanlu () examine the impact of organizational complexity on earnings forecast behavior. We focus on their measure of structural complexity based on a business segment index for each firm.…”

Section: Robustness and Alternative Readability Measuresmentioning

confidence: 99%

“…Perhaps, once the complexity of the firm is properly controlled for, the link with file size and our three dependent variables will disappear. Jennings, Stoumbos, and Tanlu (2012) examine the impact of organizational complexity on earnings forecast behavior. We focus on their measure of structural complexity based on a business segment index for each firm.…”

Section: A Robustness Tests Using Business Segment Datamentioning

confidence: 99%

“…Would researchers be better off using more complicated and more technically challenging measures for 10-K readability? In Table IX, we consider eight readability measures in the context of the regressions reported 16 We also considered, from Jennings, Stoumbos, and Tanlu (2012), geographic segment data and "sophistication and quality of accounting and control systems," defined as the time lag between the fiscal year-end and the 10-K filing date. The geographic segment data further reduced the sample and were not significant in any of the regressions in Table VIII.…”

Section: B Alternative Measures Of Readabilitymentioning

confidence: 99%

“…We also considered, from Jennings, Stoumbos, and Tanlu (), geographic segment data and “sophistication and quality of accounting and control systems,” defined as the time lag between the fiscal year‐end and the 10‐K filing date. The geographic segment data further reduced the sample and were not significant in any of the regressions in Table .…”

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confidence: 99%

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Measuring Readability in Financial Disclosures

Loughran

McDonald²

2014

The Journal of Finance

1,067

353

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Defining and measuring readability in the context of financial disclosures becomes important with the increasing use of textual analysis and the Securities and Exchange Commission's plain English initiative. We propose defining readability as the effective communication of valuation‐relevant information. The Fog Index—the most commonly applied readability measure—is shown to be poorly specified in financial applications. Of Fog's two components, one is misspecified and the other is difficult to measure. We report that 10‐K document file size provides a simple readability proxy that outperforms the Fog Index, does not require document parsing, facilitates replication, and is correlated with alternative readability constructs.

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Section: Robustness and Alternative Readability Measuresmentioning

confidence: 99%

Section: A Robustness Tests Using Business Segment Datamentioning

confidence: 99%

Section: B Alternative Measures Of Readabilitymentioning

confidence: 99%

mentioning

confidence: 99%

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Measuring Readability in Financial Disclosures

Loughran

McDonald²

2014

The Journal of Finance

1,067

353

View full text Add to dashboard Cite

show abstract

“…Third, audit standards (PCAOB, 2007) now identify the financial close process as a high risk area and several companies have disclosed internal control weaknesses related to the financial close process in recent SEC filings (Approva, 2006;Doyle et al, 2007;PCAOB, 2007PCAOB, , 2010Klamm et al, 2012). Finally, some academic researchers use the speed of the financial close process as a proxy for the quality of a company's internal information environment (Jennings et al, 2012;Gallemore and Labro, 2013). Accounting systems often vary by company size.…”

Section: Introductionmentioning

confidence: 99%

The financial close process: Implications for future research

Janvrin

Mascha

2014

International Journal of Accounting Information Systems

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Effects of diversification on firm performance: an analysis of Indian firms

Bose

Chakraborty

2022

Ind. Econ. Rev.

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This study has empirically tested the relationship between diversification and firm performance using balanced panel data on 1759 firms in India. We include firms across all industries in the manufacturing and service sector during the period 2012-2018. Our dynamic panel estimation results indicate that diversification measured by count, entropy index, or weighted diversification index, does not have a statistically significant impact on performance measured by Tobin's Q and Return on Assets (ROA). The results hold irrespective of firm size, firm age, and group affiliation. Our robustness test, applying 2SLS method, corroborates the above findings for ROA but shows a negative relation with Tobin's Q for some measures of diversification.

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The Effect of Organizational Complexity on Earnings Forecasting Behavior

Cited by 31 publications

References 80 publications

Measuring Readability in Financial Disclosures

Measuring Readability in Financial Disclosures

The financial close process: Implications for future research

Effects of diversification on firm performance: an analysis of Indian firms

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