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Textual analysis and international financial reporting: Large sample evidence

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  • Lang, Mark
  • Stice-Lawrence, Lorien

Abstract

We examine annual report text for over 15,000 non-US companies from 42 countries over the period 1998–2011, focusing on the length of disclosure, presence of boilerplate, comparability with US and non-US firms, and complexity. We find that textual attributes are predictably associated with regulation and incentives for more transparent disclosure and are correlated with economic outcomes such as liquidity, institutional ownership, and analyst following. Using mandatory IFRS adoption as an exogenous shock, annual report disclosure improved in the sense that quantity of disclosure increased, boilerplate was reduced, and comparability increased relative to both US and non-US firms. Firms with the greatest improvements in financial reporting experienced the greatest improvements in economic outcomes around IFRS adoption.

Suggested Citation

  • Lang, Mark & Stice-Lawrence, Lorien, 2015. "Textual analysis and international financial reporting: Large sample evidence," Journal of Accounting and Economics, Elsevier, vol. 60(2), pages 110-135.
  • Handle: RePEc:eee:jaecon:v:60:y:2015:i:2:p:110-135
    DOI: 10.1016/j.jacceco.2015.09.002
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    More about this item

    Keywords

    International accounting; Textual analysis; Disclosure;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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