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A Comparative Study of the Readability of MD&A Discourse of Chinese and American Listed Companies from a Cross-Cultural Perspective

Author

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  • Zhang Qian

    (School of English Studies, Tianjin Foreign Studies University)

Abstract

In recent years, with the accelerated development of globalization, many Chinese companies have opted for internationalization strategies to better integrate into the global market, with listing on the U.S. securities market emerging as a top choice for many. In the U.S. securities market, the “Management’s Discussion and Analysis†(MD&A) section of the annual reports of listed companies serves as a crucial conduit for information exchange between companies and investors and a primary focus of scrutiny by the U.S. Securities and Exchange Commission. Consequently, ensuring the accuracy, completeness, and comprehensibility of the MD&A section has become a focal point for many businesses and researchers. This study employs a comprehensive array of research methodologies to delve deeper into this issue. Firstly, to scientifically assess the readability differences in the MD&A texts of Chinese and American listed companies, this research utilizes the TAALES corpus tool to measure four psycholinguistic lexical feature indices of the MD&A text: specificity, familiarity, imagery, and meaningfulness. Additionally, the widely used Dale-Chall Readability Formula is employed to evaluate the readability of the annual reports. Independent sample t-tests were conducted on the readability metric data of Chinese and American enterprises’ MD&A, revealing significant differences in specificity, familiarity, imagery, and overall readability, with Chinese enterprises’ MD&A texts being less readable than their American counterparts.

Suggested Citation

  • Zhang Qian, 2024. "A Comparative Study of the Readability of MD&A Discourse of Chinese and American Listed Companies from a Cross-Cultural Perspective," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3s), pages 6041-6072, December.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:3s:p:6041-6072
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    References listed on IDEAS

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    1. Jaywon Lee & Jongwon Park, 2019. "The Impact of Audit Committee Financial Expertise on Management Discussion and Analysis (MD&A) Tone," European Accounting Review, Taylor & Francis Journals, vol. 28(1), pages 129-150, January.
    2. Yubin Qian & Ya Sun, 2022. "Bibliometric analysis of literature on narrative discourse in corporate annual reports (1990–2019)," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(2), pages 429-446, April.
    3. Peter M. Clarkson & Jennifer L. Kao & Gordon D. Richardson, 1999. "Evidence That Management Discussion and Analysis (MD&A) is a Part of a Firm's Overall Disclosure Package," Contemporary Accounting Research, John Wiley & Sons, vol. 16(1), pages 111-134, March.
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