Abstract

https://ssrn.com/abstract=2741682
 


 



The Evolution of 10-K Textual Disclosure: Evidence from Latent Dirichlet Allocation


Travis Dyer


University of North Carolina at Chapel Hill

Mark H. Lang


University of North Carolina at Chapel Hill

Lorien Stice-Lawrence


University of North Carolina at Chapel Hill

October 2016


Abstract:     
While characteristics of quantitative accounting data have received substantial attention in the academic literature, much less is known about the accompanying text. We document marked trends in 10-K disclosure over the period 1996-2013, with increases in length, boilerplate, stickiness, and redundancy and decreases in specificity, readability, and the relative amount of hard information. We use Latent Dirichlet Allocation (LDA) to examine specific topics and find that new FASB and SEC requirements explain most of the increase in length and that 3 of the 150 topics — fair value, internal controls, and risk factor disclosures — account for virtually all of the increase. These three disclosures also play a major role in explaining the trends in the remaining textual characteristics. Our results are potentially relevant to regulators in understanding trends in, and topical sources of textual characteristics amid concerns about increasingly onerous accounting disclosures.

Number of Pages in PDF File: 68

Keywords: Disclosure Regulation, Textual Analysis, Latent Dirichlet Allocation, Financial Reporting

JEL Classification: M40, M41, M48


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Date posted: March 7, 2016 ; Last revised: October 14, 2016

Suggested Citation

Dyer, Travis and Lang, Mark H. and Stice-Lawrence, Lorien, The Evolution of 10-K Textual Disclosure: Evidence from Latent Dirichlet Allocation (October 2016). Available at SSRN: https://ssrn.com/abstract=2741682 or http://dx.doi.org/10.2139/ssrn.2741682

Contact Information

Travis Dyer
University of North Carolina at Chapel Hill ( email )
McColl Building
Chapel Hill, NC 27599-3490
United States

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 North Carolina at Chapel Hill ( email )
CB 3490, McColl Building
Kenan-Flagler Business School
Chapel Hill, NC 27599
United States
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