Corporate Reporting Readability and Regulatory Review Risk

Baltic Journal of Management, Vol. 13 No. 4, pp. 488-507, 2018

Posted: 28 Dec 2019

See all articles by Reza Hesarzadeh

Reza Hesarzadeh

Ferdowsi University of Mashhad

Ameneh Bazrafshan

Imam Reza International University

Date Written: April 1, 2018

Abstract

Purpose — The regulatory review process imposes significant costs on companies. Therefore, managers try to find ways to avoid the regulatory review risk. This paper investigates whether corporate reporting readability reduces the regulatory review risk.

Design/methodology/approach — This study measures the corporate reporting readability using the Fog Index. It measures the regulatory review risk using the probability of receiving a comment letter from the Securities and Exchange Organization of Iran.

Findings — The findings reveal that corporate reporting readability reduces the regulatory review risk, after controlling for the factors that affect the regulatory review risk.

Originality/value — The current paper identifies an easy strategy for managers to mitigate one of the important risks faced by companies. Thus, the results will be of interest to managers, audit committees, and stakeholders involved in the regulatory review process.

Keywords: Accounting; Corporate Reporting Readability, Managers, Regulatory Review Risk, Comment Letters, Processing Fluency Theory

JEL Classification: M40

Suggested Citation

Hesarzadeh, Reza and Bazrafshan, Ameneh, Corporate Reporting Readability and Regulatory Review Risk (April 1, 2018). Baltic Journal of Management, Vol. 13 No. 4, pp. 488-507, 2018, Available at SSRN: https://ssrn.com/abstract=3129977

Reza Hesarzadeh

Ferdowsi University of Mashhad ( email )

Mashhad, 9177948974
Iran

HOME PAGE: http://Hesarzadeh.profcms.um.ac.ir/

Ameneh Bazrafshan (Contact Author)

Imam Reza International University ( email )

Felestin Square, Mashhad, 91735553 Iran
Mashhad, 91735553
Iran

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