Purpose

The purpose of this study is to examine the impact of proximity to broad bond rating change on annual report reading difficulty.

Design/methodology/approach

We use regression analysis to examine the association between proximity to broad bond rating change and reading difficulty of annual report.

Findings

Using a large panel sample with 11,767 firm-year observations representing 1,474 unique US companies from 1994 to 2016, we find a significant positive relation between proximity to broad bond rating change and annual report reading difficulty, which suggests that the annual reports of borderline firms are difficult for stakeholders to read and understand.

Originality/value

By investigating whether and how borderline firms manipulate readability of annual reports, our study contributes to bond rating research in finance literature and disclosure quality research in accounting literature. To the best of our knowledge, this study is perhaps the first empirical study that directly tests the link between proximity to broad bond rating change and annual report readability. In particular, the majority of prior studies concentrate on the economic consequences of annual report readability, but few studies investigate the determinants of readability. Therefore, examining the impact of proximity to broad bond rating change on readability contributes to a more comprehensive understanding of annual report readability.

中文翻译：

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接近广泛的债券评级变化和年度报告的可读性

目的

本研究的目的是检验接近广泛的债券评级变化对年度报告阅读难度的影响。

设计/方法/方法

我们使用回归分析来检验接近广泛债券评级变化与年报阅读难度之间的关联。

发现

我们使用一个庞大的面板样本，对1994年至2016年间有1,474家美国独特公司的11,767家公司进行了观察，发现在广泛债券评级变化的接近性与年度报告阅读难度之间存在显着的正相关关系，这表明边界公司的年度报告是利益相关者难以阅读和理解。

创意/价值

通过调查边界公司是否以及如何操纵年度报告的可读性，我们的研究有助于金融文献中的债券评级研究和会计文献中的披露质量研究。据我们所知，本研究可能是第一项直接检验接近广泛债券评级变化的接近度与年度报告可读性之间的联系的实证研究。特别是，大多数先前的研究都集中在年度报告可读性的经济后果上，但是很少有研究调查可读性的决定因素。因此，检查接近广泛的债券评级变化对可读性的影响有助于更全面地理解年度报告的可读性。