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Lookup NU author(s): Dr Ekaete Efretuei
This is the authors' accepted manuscript of an article that has been published in its final definitive form by American Accounting Association, 2020.
For re-use rights please refer to the publisher's terms and conditions.
In this study, I examine variations in the textual complexity of annual report narrative disclosures using the Fog Readability Index and Fin-Neg word list Tone Index given year and industry effects. I analyse accounting narrative Readability and Tone based on firm years, associations between the two narrative measures, and industry data. Tests of the relationship between Readability and Tone show that negative narratives have higher Readability scores, supporting the obfuscation hypothesis that bad news tends to be more difficult to read. A year analysis shows that the negative relationship between Readability and Tone increases in significance over time (2006–2011). An industry analysis shows that the observed obfuscation tends to persist in basic materials; consumer services; financial; technology; and utilities industries. This study shows that considering the effect of variations between industry and firm years can inform annual report textual complexity research and associated empirical analyses.
Author(s): Efretuei E
Publication type: Article
Publication status: Published
Journal: Journal of Emerging Technologies in Accounting
Year: 2020
Volume: n/a
Pages: 1-50
Online publication date: 18/11/2020
Acceptance date: 16/11/2020
Date deposited: 14/12/2020
ISSN (print): 1554-1908
ISSN (electronic): 1558-7940
Publisher: American Accounting Association
URL: https://doi.org/10.2308/JETA-18-12-21-26
DOI: 10.2308/JETA-18-12-21-26
Notes: e-pub ahead of print
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