Purpose

The purpose of the study is to investigate the possible role of annual report readability in accrual anomaly, shedding light on why investors fail to incorporate accruals information in a timely and unbiased manner beyond the original naive investor fixation explanation.

Design/methodology/approach

Using five proxies of annual report readability and available data over 1993–2017, we investigate whether accrual overpricing is more severe when annual reports are less readable.

Findings

We find little (substantive) evidence of accrual overpricing among high (low) readability firms. The readability effects are contingent on the level of business complexity and earnings management.

Research limitations/implications

This study extends the original naive investor fixation explanation and documents annual report complexity as a market friction in explaining the accrual anomaly, contributing to the mispricing vs risk debate and supporting the efficient market hypothesis.

Practical implications

Low readability of annual reports is a red flag to investors.

Social implications

This study provides support for regulatory initiatives aimed at enhancing readability of corporate disclosures to address market frictions and improve market efficiency.

Originality/value

Accrual anomaly has posed a challenge to the efficient market hypothesis. This study draws on and adds to the line of research indicating that annual report complexity is a friction erecting a barrier to transparency, hindering market efficiency. This study contributes to our understanding of the enigmatic accrual anomaly.

中文翻译：

---

年度报告的可读性是否可以解释应计异常？

目的

该研究的目的是调查年度报告可读性在应计异常中的可能作用，阐明为什么投资者未能及时和公正地纳入应计信息，而不是最初的幼稚投资者固定解释。

设计/方法/方法

使用 1993-2017 年年度报告可读性的五个指标和可用数据，我们调查了当年度报告可读性较差时，应计定价过高是否更严重。

发现

我们发现很少（实质性）证据表明高（低）可读性公司的应计定价过高。可读性影响取决于业务复杂性和盈余管理水平。

研究限制/影响

本研究扩展了最初朴素的投资者固定解释，并将年度报告的复杂性记录为解释应计异常的市场摩擦，有助于错误定价与风险的辩论，并支持有效市场假设。

实际影响

年度报告的可读性低对投资者来说是一个危险信号。

社会影响

本研究为旨在提高企业披露可读性以解决市场摩擦和提高市场效率的监管举措提供支持。

原创性/价值

应计异常对有效市场假说提出了挑战。本研究借鉴并补充了一项研究，表明年度报告的复杂性是一种摩擦，为透明度设置了障碍，阻碍了市场效率。这项研究有助于我们理解神秘的应计异常。