Narrative Analysis of Annual Reports: A Study of Communication Efficiency

36 Pages Posted: 29 May 2015 Last revised: 30 Jan 2017

See all articles by Padmini Srinivasan

Padmini Srinivasan

Indian Institute of Management Bangalore

Srinivasan R.

Indian Institute of Management Bangalore

Ana Cristina Marques

Norwich Business School - University of East Anglia

Date Written: January 30, 2017

Abstract

This paper investigates the quality and efficiency of corporate annual reports disclosures in malevolent environments, by analyzing the annual reports of firms in the Indian automobile industry during the global recession period (2008 through 2012). The study is based on the content analysis of the Management Discussion and Analysis (MD&A) sections of annual reports, as content analysis is a primary tool for studying textual complexity. Using the Flesch Reading Ease formula, we find that the reading ease of annual report texts varies decreases significantly and progressively across the years studied. Thus, in years when the environment is difficult (like a global recession) firms obfuscate their texts, irrespective of their financial performance and characteristics.

Keywords: Readability, Annual Report, Accounting Narratives; Communication Efficiency, Environmental Malevolence

Suggested Citation

Srinivasan, Padmini and R., Srinivasan and Marques, Ana Cristina, Narrative Analysis of Annual Reports: A Study of Communication Efficiency (January 30, 2017). IIM Bangalore Research Paper No. 486, Available at SSRN: https://ssrn.com/abstract=2611890 or http://dx.doi.org/10.2139/ssrn.2611890

Padmini Srinivasan (Contact Author)

Indian Institute of Management Bangalore ( email )

Bannerghatta Road
Bangalore, 560 076
India

Srinivasan R.

Indian Institute of Management Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Ana Cristina Marques

Norwich Business School - University of East Anglia ( email )

Norwich
NR4 7TJ
United Kingdom

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