Creating a Fog: Can Plain English Be Used to Mislead Investors?

A recent growth in textual analysis research in the accounting and finance literature relies heavily on context to draw conclusions about the readability or sentiment of the text under study. Yet the complexity of the text used in the financial disclosure is also relevant in evaluating readability a...

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Main Author: Collins, Scott
Format: Others
Published: Scholarship @ Claremont 2012
Subjects:
Online Access:http://scholarship.claremont.edu/cgu_etd/71
http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1072&context=cgu_etd
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spelling ndltd-CLAREMONT-oai-scholarship.claremont.edu-cgu_etd-10722014-07-02T03:36:29Z Creating a Fog: Can Plain English Be Used to Mislead Investors? Collins, Scott A recent growth in textual analysis research in the accounting and finance literature relies heavily on context to draw conclusions about the readability or sentiment of the text under study. Yet the complexity of the text used in the financial disclosure is also relevant in evaluating readability and sentiment. Experimental results in this dissertation thesis show that a change in annual report complexity is associated with a change in the probability that a subject will comprehend the information being communicated in the disclosure. Specifically, increasing the complexity of an annual report disclosure dampens the probability that a subject will understand good news disclosures and accentuates the probability that a subject will understand bad news disclosures. Experimental results in this dissertation thesis also demonstrate that a change in annual report complexity is associated with a change in the probability that a subject will be optimistic about the nature of the news being communicated in the disclosure. Specifically, an increase in the complexity of an annual report disclosure reduces the probability that a subject will be optimistic about neutral news disclosures, decreases the probability that a subject will be optimistic about good news disclosures, and increases the probability that a subject will be optimistic about bad news disclosures. Further, experimental results show that subjects utilize the Financial Statements, Management's Discussion and Analysis, and Business Data sections of the annual report more frequently than the Notes to Financial Statements section of the annual report. These results should be of interest to regulators, public corporations, and readers of annual report disclosures. 2012-01-01T08:00:00Z text application/pdf http://scholarship.claremont.edu/cgu_etd/71 http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1072&context=cgu_etd © 2012 Scott Collins CGU Theses & Dissertations Scholarship @ Claremont Annual Report Complexity Plain English Readability Textual Analysis Accounting
collection NDLTD
format Others
sources NDLTD
topic Annual Report
Complexity
Plain English
Readability
Textual Analysis
Accounting
spellingShingle Annual Report
Complexity
Plain English
Readability
Textual Analysis
Accounting
Collins, Scott
Creating a Fog: Can Plain English Be Used to Mislead Investors?
description A recent growth in textual analysis research in the accounting and finance literature relies heavily on context to draw conclusions about the readability or sentiment of the text under study. Yet the complexity of the text used in the financial disclosure is also relevant in evaluating readability and sentiment. Experimental results in this dissertation thesis show that a change in annual report complexity is associated with a change in the probability that a subject will comprehend the information being communicated in the disclosure. Specifically, increasing the complexity of an annual report disclosure dampens the probability that a subject will understand good news disclosures and accentuates the probability that a subject will understand bad news disclosures. Experimental results in this dissertation thesis also demonstrate that a change in annual report complexity is associated with a change in the probability that a subject will be optimistic about the nature of the news being communicated in the disclosure. Specifically, an increase in the complexity of an annual report disclosure reduces the probability that a subject will be optimistic about neutral news disclosures, decreases the probability that a subject will be optimistic about good news disclosures, and increases the probability that a subject will be optimistic about bad news disclosures. Further, experimental results show that subjects utilize the Financial Statements, Management's Discussion and Analysis, and Business Data sections of the annual report more frequently than the Notes to Financial Statements section of the annual report. These results should be of interest to regulators, public corporations, and readers of annual report disclosures.
author Collins, Scott
author_facet Collins, Scott
author_sort Collins, Scott
title Creating a Fog: Can Plain English Be Used to Mislead Investors?
title_short Creating a Fog: Can Plain English Be Used to Mislead Investors?
title_full Creating a Fog: Can Plain English Be Used to Mislead Investors?
title_fullStr Creating a Fog: Can Plain English Be Used to Mislead Investors?
title_full_unstemmed Creating a Fog: Can Plain English Be Used to Mislead Investors?
title_sort creating a fog: can plain english be used to mislead investors?
publisher Scholarship @ Claremont
publishDate 2012
url http://scholarship.claremont.edu/cgu_etd/71
http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1072&context=cgu_etd
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