We explore how the readability of annual reports varies with earnings management. Using the Fog Index to measure readability (Li 2008), and focusing on the management discussion and analysis section of the annual report (MD&A), we predict and find that firms that are most likely to have managed earnings to beat the prior year’s earnings have MD&As that are more difficult to read. In addition, we find that readability has marginal but incremental power in predicting financial misstatements when added to the F-Score model of Dechow et al. (2011)
| Speaker: | Dr Rafael Rogo Assistant Professor, University of British Columbia |
| When: |
3.30 - 5.00pm |
| Venue: | School of Accountancy Level 3, Seminar Room 3.5 |
| Contact: | Office of the Dean Email: SOAR@smu.edu.sg |