Annual report readability, current earnings, and earnings persistence

Feng Li

Journal of Accounting and Economics, 2008, vol. 45, issue 2-3, 221-247

Abstract: This paper examines the relation between annual report readability and firm performance and earnings persistence. I measure the readability of public company annual reports using the Fog index from the computational linguistics literature and the length of the document. I find that: (1) the annual reports of firms with lower earnings are harder to read (i.e., they have a higher Fog index and are longer); and (2) firms with annual reports that are easier to read have more persistent positive earnings.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:45:y:2008:i:2-3:p:221-247

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