Business strategies and annual report readability

Ahsan Habib*, Mostafa Monzur Hasan

*Corresponding author for this work

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This study investigates the association between firm-level business strategy and the readability of narrative disclosures in annual reports. As business strategy affects the information environment and financial performance of firms, we expect the readability of narrative disclosures to vary with the particular business strategy that a firm pursues. In accord with this expectation, we find that firms with prospector-type business strategies produce less readable narratives, while those with defender-type business strategies produce more readable narratives. We also document that the association between strategy and readability is partially mediated by organisational performance, although the mediation effect is rather modest. These findings are robust when subjected to a series of sensitivity tests.

Original languageEnglish
Pages (from-to)2513-2547
Number of pages35
JournalAccounting and Finance
Volume60
Issue number3
Early online date11 Jul 2018
DOIs
Publication statusPublished - Sep 2020
Externally publishedYes

Keywords

  • Analysers
  • Business strategies
  • Defenders
  • Narrative disclosures
  • Prospectors

Fingerprint Dive into the research topics of 'Business strategies and annual report readability'. Together they form a unique fingerprint.

Cite this