Obfuscation, Textual Complexity and the Role of Regulated Narrative Accounting Disclosure in Corporate Governance

Brian Rutherford ()

Journal of Management & Governance, 2003, vol. 7, issue 2, 187-210

Abstract: This paper examines whether poorly performingcompanies use textual complexity to obfuscatein the Operating and Financial Review (OFR) andthus undermine effective communication and goodgovernance. Prior research on the ‘obfuscationhypothesis’ has reached confused andcontradictory conclusions. The OFR is a usefulobject for testing the hypothesis because itssemi-regulated status provides a measure ofcommonality of content while leaving scope forvariability in textual complexity. This studyexamines whole texts, employs a larger numberof variables and proxy measures than previousstudies, and uses regression analysis, toovercome some of the possible causes ofinconsistency in previous results. It concludesthat poorly performing companies do notobfuscate by the use of textual complexity.OFRs are nonetheless textually complex and byno means all this complexity can be attributedto the complexity of the underlying activitiesto be described. The consequences of thisfinding for regulators and researchers arebriefly examined. The weakness of the evidencefor the hypothesised obfuscation by textualcomplexity shifts attention to other forms ofobfuscation and some suggestions for futureresearch are made. Copyright Kluwer Academic Publishers 2003

Keywords: accounting narratives; impression management; obfuscation hypothesis; Operating and Financial Review; textual complexity (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

Downloads: (external link)
http://hdl.handle.net/10.1023/A:1023647615279 (text/html)
Access to full text is restricted to subscribers.

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:kap:jmgtgv:v:7:y:2003:i:2:p:187-210

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/10997/PS2

DOI: 10.1023/A:1023647615279

Access Statistics for this article

Journal of Management & Governance is currently edited by Lino Cinquini

More articles in Journal of Management & Governance from Springer, Accademia Italiana di Economia Aziendale (AIDEA) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().