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An analysis of the relationship between readability of the chairman's statement and firm financial performance in South Africa

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  • Sinethemba Mankayi

    (School of Accounting, Economics and Finance, University of KwaZulu-Natal, Westville Campus, University Road, Westville, Private Bag X54001, 4000 Durban, South Africa)

  • Frank Ranganai Matenda

    (Postdoctoral Research Fellow, School of Accounting, Economics, and Finance, University of KwaZulu-Natal, Westville Campus, University Road, Westville, Private Bag X54001, 4000 Durban, South Africa)

  • Mabutho Sibanda

    (Professor, School of Accounting, Economics, and Finance, University of KwaZulu-Natal, Westville Campus, University Road, Westville, Private Bag X54001, 4000 Durban, South Africa)

Abstract

Stakeholders receive a comprehensive message that includes financial information, non-financial information, and a forecast for the future. Chairman’s disclosure is susceptible to manipulation by directors resulting to less transparency and thereby misleading the stakeholders. An evaluation of the chairman's messages in relation to financial performance is conducted in this study. The study examined the top 40 listed companies on the Johannesburg Stock Exchange for the year 2021, using the Gunning Fog Index as a measure of readability of the chairman's statement and Return on Equity (ROE) as a measure of financial performance. In order to determine the relationship between the chairman's statement readability and the company's financial performance, multiple linear regression was applied. This study found that as company performance increases, readability becomes more difficult. In contributing to existing literature, the study examines how the chairman's statement is correlated with financial performance from a South African viewpoint. Key Words:Chairman’s statement, readability, financial performance, JSE

Suggested Citation

  • Sinethemba Mankayi & Frank Ranganai Matenda & Mabutho Sibanda, 2023. "An analysis of the relationship between readability of the chairman's statement and firm financial performance in South Africa," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(8), pages 205-214, November.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:8:p:205-214
    DOI: 10.20525/ijrbs.v12i8.2772
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