Textual Analysis and International Financial Reporting: Large Sample Evidence

63 Pages Posted: 13 Mar 2014 Last revised: 23 Oct 2015

See all articles by Mark H. Lang

Mark H. Lang

University of North Carolina at Chapel Hill

Lorien Stice-Lawrence

University of Southern California - Leventhal School of Accounting

Date Written: February 14, 2015

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.

Keywords: Textual Analysis, International Financial Reporting, IFRS, Disclosure, Comparability

JEL Classification: F30, G15, K20, M41, N20

Suggested Citation

Lang, Mark H. and Stice-Lawrence, Lorien, Textual Analysis and International Financial Reporting: Large Sample Evidence (February 14, 2015). Journal of Accounting & Economics (JAE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2407572 or http://dx.doi.org/10.2139/ssrn.2407572

Mark H. Lang (Contact Author)

University of North Carolina at Chapel Hill ( email )

Kenan-Flagler Business School
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-1644 (Phone)
919-962-4727 (Fax)

Lorien Stice-Lawrence

University of Southern California - Leventhal School of Accounting ( email )

Los Angeles, CA 90089-0441
United States

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