An X-Ray Using NLP Techniques of Financial Reporting Quality in Central and Eastern European Countries

Tatiana Dănescu and Roxana Maria Stejerean ()
Additional contact information
Tatiana Dănescu: Department of Economic Sciences, Faculty of Economics and Law, University of Medicine, Pharmacy, Science and Technology “George Emil Palade” of Targu Mures, 540566 Târgu Mures, Romania
Roxana Maria Stejerean: Doctoral School of Accounting, “1 Decembrie 1918” University of Alba Iulia, 510009 Alba Iulia, Romania

IJFS, 2025, vol. 13, issue 3, 1-22

Abstract: This study assesses the quality of financial reporting in ten Central and Eastern European countries using a methodology based on natural language processing (NLP) techniques. 570 annual reports of companies listed on the main index on the stock exchanges of 10 Central and Eastern European (CEE) countries, over the period 2019–2023, were evaluated to determine the degree of convergence of the following four measurable qualitative characteristics: relevance, exact representation, comparability and understandability. The main objective is to identify consistency in the quality of accounting information based on the application of an international financial reporting framework. The applied methodology eliminates subjective variability by implementing a standardized scoring system, aligned with the criteria developed by NiCE, using libraries such as spaCy and NLTK for term extraction, respective sentiment analysis and word frequency evaluation. The results reveal significant heterogeneity in all characteristics examined, with statistical tests confirming substantial differences between countries. The investigation of relevance revealed partial convergence, with three dimensions achieving complete uniformity, while the exact representation showed the highest variability. The assessment of comparability showed a significant difference between countries’ extreme values, and in terms of comprehensibility a formalistic approach was evident, with technical dimensions outweighing user-oriented aspects. The overall quality index varied significantly across countries, with a notable average deterioration in 2023, indicating structural vulnerabilities in financial reporting systems. These findings support initial hypotheses on the lack of homogeneity in the quality of financial reporting in the selected region, despite the implementation of international standards.

Keywords: financial reporting; qualitative characteristics; accounting convergence (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7072/13/3/142/pdf (application/pdf)
https://www.mdpi.com/2227-7072/13/3/142/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijfss:v:13:y:2025:i:3:p:142-:d:1718421

Access Statistics for this article

IJFS is currently edited by Ms. Hannah Lu

More articles in IJFS from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().