Financial Report Readability and Accounting Conservatism

Zhimin (Jimmy) Yu ()
Additional contact information
Zhimin (Jimmy) Yu: Marilyn Davies College of Business, University Houston Downtown, Houston, TX 77002, USA

JRFM, 2022, vol. 15, issue 10, 1-9

Abstract: Accounting conservatism could affect the quantitative information on a financial statement. In this paper, the author focuses on qualitative information on financial statements. The author investigates the association between financial report readability and accounting conservatism and uses the FOG index to measure financial report readability. By using management discussion and analysis (MD&A) from 1996 to 2019, the author finds that financial report readability is positively associated with accounting conservatism. Additionally, the author separates the samples into high-compensation incentive and low-compensation incentive subsamples. The results show that the above association is stronger in the high-compensation incentive samples than in the low-compensation incentive samples. This result implies that accounting conservatism could mitigate managerial opportunism in the qualitative disclosure setting.

Keywords: financial report readability; accounting conservatism; compensation incentive (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1911-8074/15/10/454/pdf (application/pdf)
https://www.mdpi.com/1911-8074/15/10/454/ (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:jjrfmx:v:15:y:2022:i:10:p:454-:d:939171

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

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