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Financial reporting readability: Managerial choices versus firm fundamentals
Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad ( IF 1.615 ) Pub Date : 2019-10-11 , DOI: 10.1080/02102412.2019.1668219
Reza Hesarzadeh 1 , Ameneh Bazrafshan 2 , Javad Rajabalizadeh 1
Affiliation  

ABSTRACT

An implicit premise of regulators and much empirical research is that financial reporting readability (readability) substantially reflects management choices. To investigate this issue, we decompose readability into its discretionary and innate components. To validate this decomposition, we examine whether these two components have different uncertainty effects. Our empirical findings show that readability is primarily the result of firm fundamentals rather than managerial choices. Furthermore, consistent with expectation, discretionary readability has a weaker uncertainty effect than innate readability. The findings are robust to a variety of additional tests. This study contributes to regulators to better assess readability and to empirical literature to construct more accurate tests.



中文翻译:

财务报告的可读性:管理选择与公司基本面

摘要

监管者和大量实证研究的隐含前提是,财务报告的可读性(readability)在很大程度上反映了管理层的选择。为了调查此问题,我们将可读性分解为其可酌定的和固有的组成部分。为了验证这种分解,我们检查了这两个分量是否具有不同的不确定性影响。我们的经验发现表明,可读性主要是公司基本面而非管理选择的结果。此外,与预期一致,任意可读性比先天可读性具有较小的不确定性影响。该发现对于各种其他测试都是可靠的。这项研究有助于监管机构更好地评估可读性,并有助于建立更准确的测试的经验文献。

更新日期:2019-10-11
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