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Title: Does Connotation Influence Readability and Obfuscation Of Narrative Financial Reporting Information?
Contributor(s): Bayerlein, Leopold  (author)orcid ; Davidson, Paul John (author)
Publication Date: 2011
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Abstract: This paper extends prior obfuscation research through an assessment of the readability and obfuscation level in the chairman addresses of large Australian listed firms. In addition, shortcomings of traditional obfuscation assessments are examined, and the advantages of a connotation-based obfuscation assessment approach are demonstrated. Drawing on prior research, the Flesch readability formula is used to assess readability and obfuscation in the chairman addresses of 87 firms included in the Standard & Poor's ASX200 index. Furthermore, traditional readability and obfuscation assessment methodologies are compared to a novel assessment approach which relies on the separation of addresses into connotation-based groups. The study confirms that chairman addresses are typically difficult, or very difficult, to read. From a structural perspective, the mid section within the analysed chairman addresses is found to exhibit significantly greater reading difficulty than the first and last sections. However, the prevalence of positive and negative news within these sections does not explain the identified differences. Finally, the largely negative connotation-group is identified as the main driver of readability differences within the analysed chairman addresses, and the advantages of a connotation-based obfuscation assessment over traditional obfuscation assessment techniques are demonstrated.
Publication Type: Conference Publication
Conference Name: EAA 2011: 34th Annual Congress of the European Accounting Association, Rome, Italy, 20th - 22nd April, 2011
Conference Details: EAA 2011: 34th Annual Congress of the European Accounting Association, Rome, Italy, 20th - 22nd April, 2011
Source of Publication: European Accounting Association 34th Annual Congress Programme and Collected Abstracts (Abstract ID. 12209)
Field of Research (FOR): 150103 Financial Accounting
150199 Accounting, Auditing and Accountability not elsewhere classified
Socio-Economic Outcome Codes: 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
900101 Finance Services
HERDC Category Description: E3 Extract of Scholarly Conference Publication
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