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Accounting narratives' characteristics and firm performance in the MD&As of listed Italian companies

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  • Helmi Hammami

Abstract

The objective of this research is to investigate the textual construction of annual reports (MD&A) of Italian listed companies. The paper builds on methodologies developed in prior empirical studies of annual reports readability and content analysis. Two dimensions are investigated: a) text ease of readability (text complexity); b) wording structure. Tests are made to measure the level of readability and wording construction of the MD&A of 40 listed companies. Results indicate that narratives are assessed as difficult to read independently of firm financial performance opening interpretations about how much attention is given to writing style in the reporting process. On the other hand, less performers seem using positive words in excess, giving too much positive colouration to their messages which may open way to several questions about intentional choice of texts and financial performance.

Suggested Citation

  • Helmi Hammami, 2011. "Accounting narratives' characteristics and firm performance in the MD&As of listed Italian companies," International Journal of Accounting and Finance, Inderscience Enterprises Ltd, vol. 3(1), pages 72-86.
    • Handle: RePEc:ids:intjaf:v:3:y:2011:i:1:p:72-86
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