Readability, profitability, and discretionary MD&A text
Abstract/Contents
- Abstract
- This study examines the relation between profitability and disclosure readability. Prior research finds that less profitable firms have less readable disclosures, which is consistent with obfuscation. However, this research does not distinguish text that is non-discretionary, i.e., required disclosure or standard language given the economic environment, from text that is discretionary, i.e., voluntary disclosure or required disclosure written in a non-standard way. I measure discretion in Management Discussion & Analysis (MD& A) sentences based on their commonness relative to sentences from firms with similar profitability. I assume that sentences that are less (more) common among firms with similar profitability contain more (less) discretion. I find that less profitable firms have less readable non-discretionary text but more readable discretionary text, and this discretionary text is even more readable when firms have stronger incentives to garner a reputation for clear disclosure. My results imply that less profitable firms have less readable disclosures because of their economic environment, yet exercise discretion by increasing readability, rather than obfuscating.
Description
| Type of resource | text |
|---|---|
| Form | electronic resource; remote; computer; online resource |
| Extent | 1 online resource. |
| Place | California |
| Place | [Stanford, California] |
| Publisher | [Stanford University] |
| Copyright date | 2018; ©2018 |
| Publication date | 2018; 2018 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Author | Gee, Kurt Harris |
|---|---|
| Degree supervisor | Barth, Mary E |
| Thesis advisor | Barth, Mary E |
| Thesis advisor | Blankespoor, Elizabeth |
| Thesis advisor | Kasznik, Ron |
| Degree committee member | Blankespoor, Elizabeth |
| Degree committee member | Kasznik, Ron |
| Associated with | Stanford University, Graduate School of Business. |
Subjects
| Genre | Theses |
|---|---|
| Genre | Text |
Bibliographic information
| Statement of responsibility | Kurt Harris Gee. |
|---|---|
| Note | Submitted to the Graduate School of Business. |
| Thesis | Thesis Ph.D. Stanford University 2018. |
| Location | electronic resource |
Access conditions
- Copyright
- © 2018 by Kurt H Gee
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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