Business Strategies and Annual Report Readability

Accounting and Finance, Forthcoming

Posted: 4 Jun 2018

See all articles by Ahsan Habib

Ahsan Habib

Massey University - School of Accountancy; Massey University

Mostafa Monzur Hasan

Macquarie University

Multiple version iconThere are 2 versions of this paper

Date Written: May 22, 2018

Abstract

This study investigates the association between firm-level business strategy, and the readability of narrative disclosures in annual reports. Since 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 organizational performance, although the mediation effect is rather modest. These findings are robust when subjected to a series of sensitivity tests.

Keywords: business strategies; narrative disclosures; prospectors; defenders; analyzers

Suggested Citation

Habib, Ahsan and Hasan, Mostafa Monzur, Business Strategies and Annual Report Readability (May 22, 2018). Accounting and Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3183253

Ahsan Habib (Contact Author)

Massey University - School of Accountancy ( email )

Auckland
New Zealand

Massey University ( email )

Auckland
New Zealand

Mostafa Monzur Hasan

Macquarie University ( email )

Level 3, Building 4ER,
Sydney, NSW 2109
Australia

HOME PAGE: http://https://researchers.mq.edu.au/en/persons/mostafa-hasan

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