Discussion of "Annual report readability, current earnings, and earnings persistence"
Li [2008. Annual report readability, current earnings, and earnings persistence. Journal of Accounting and Economics, this issue, doi:10.1016/j.jacceco.2008.02.003] finds that firms with losses, or with transient income, write annual reports with long sentences and big words. I begin by discussing some explanations for Li's primary results, using his more detailed results, along with the results of related papers, to assess the plausibility of those explanations. I then briefly discuss the 10-K's of a single company over the course of 3 years, to provide more detailed insight into what might drive the length and readability of annual reports. Finally, I present some possible directions for future research.
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References listed on IDEAS
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- Gregory S. Miller, 2002. "Earnings Performance and Discretionary Disclosure," Journal of Accounting Research, Wiley Blackwell, vol. 40(1), pages 173-204, 03.
- Amy P. Hutton & Gregory S. Miller & Douglas J. Skinner, 2003. "The Role of Supplementary Statements with Management Earnings Forecasts," Journal of Accounting Research, Wiley Blackwell, vol. 41(5), pages 867-890, December.
- Skinner, Douglas J., 1997. "Earnings disclosures and stockholder lawsuits," Journal of Accounting and Economics, Elsevier, vol. 23(3), pages 249-282, November.
- Basu, Sudipta, 1997. "The conservatism principle and the asymmetric timeliness of earnings," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 3-37, December. Full references (including those not matched with items on IDEAS)
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