Please use this identifier to cite or link to this item: https://hdl.handle.net/1959.11/7960
Title: Positive versus Negative News: Readability and Obfuscation in Financial Reports
Contributor(s): Bayerlein, Leopold  (author)orcid 
Publication Date: 2010
Handle Link: https://hdl.handle.net/1959.11/7960
Abstract: This paper extends prior obfuscation research through an assessment of the readability and obfuscation levels in chairman and/or CEO reports of 30 listed Australian firms. In addition, possible associations between obfuscation and several basic firm level performance indicators as well as possible mitigating factors are assessed. Drawing on prior research, the Flesch readability formula is used to assess readability and obfuscation. However, a novel methodological approach is used to distinguish between cases of positive and negative news. The study finds that the analysed narratives are typically very difficult to read. A significant association is found between the presence/absence of obfuscation and year to year changes of a firm's net profit, whilst the associations between obfuscation and year to year changes of a firm's debt ratio, a firm's level of shareholder concentration, and the proportion to which a firm's board is staffed with independent directors are non-significant. This paper adds to prior literature by introducing a new basis upon which the readability of positive news and negative news, and thus obfuscation is determined. This new methodology improves the assessment of obfuscation because the definitions of its components are more closely aligned with the assessment intention of the obfuscation hypothesis.
Publication Type: Conference Publication
Conference Name: International Association for Accounting Education and Research (IAAER) 11th World Congress of Accounting Educators and Researchers, Singapore, 4th - 6th November, 2010
Conference Details: International Association for Accounting Education and Research (IAAER) 11th World Congress of Accounting Educators and Researchers, Singapore, 4th - 6th November, 2010
Source of Publication: IAAER 11th World Congress of Accounting Educators and Researchers Paper Abstracts, p. 63-63
Publisher: IAAER: International Association for Accounting Education and Research
Place of Publication: Online
Field of Research (FOR): 150199 Accounting, Auditing and Accountability not elsewhere classified
Socio-Economic Outcome Codes: 900199 Financial Services not elsewhere classified
900299 Property, Business Support Services and Trade not elsewhere classified
HERDC Category Description: E3 Extract of Scholarly Conference Publication
Other Links: http://congress.iaaer.org/program/
http://congress.iaaer.org/program/11th%20World%20Congress%20Abstracts.pdf
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