Dialect diversity, corporate annual report text readability and stock price crash risks

From a linguistic and cultural perspective, this paper systematically investigates the impact of regional dialect diversity on the readability of annual report texts of Chinese A-share listed companies, and further explores its transmission effect on the risk of stock price collapse. Based on the data of A-share listed companies from 2013 to 2022, the empirical results show that: the higher the level of dialect diversity, the readability of the text of the annual reports of enterprises decreases significantly, and dialect diversity indirectly raises the risk of share price collapse of enterprises by decreasing the readability of the text of the annual reports; and this effect is found in the eastern coastal region, the region with a lower degree of Putonghua penetration, state-owned enterprises, and core cities (municipalities, provincial capitals, and planned cities). This paper expands the research on the factors influencing the quality of corporate disclosure, enriches the empirical evidence at the intersection of cultural and institutional economics, and provides policy implications for optimizing the practice of corporate disclosure, improving regulatory policies and promoting the promotion of Mandarin.