Grammatical Violations and Financial Reporting Quality

68 Pages Posted: 17 Dec 2019 Last revised: 2 Jun 2020

See all articles by Jacquelyn Gillette

Jacquelyn Gillette

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Gabriel Pundrich

University of Florida; Massachusetts Institute of Technology (MIT)

Date Written: June 1, 2020


We examine whether grammatical violations (GVs) in annual financial reports (10-Ks) provide a timely signal of financial reporting quality. To the extent that GVs capture the time, effort, and resources devoted to the preparation of financial filings, we predict that GVs are correlated with the reliability of the accounting numbers. We validate this assumption by documenting that GVs are negatively correlated with empirical measures of (i) the quality of the firm’s internal information environment, (ii) the time that firms have to file their financial statements, and (iii) the strength of the firm’s monitoring over the financial reporting process. Consistent with our prediction, we find that GVs are positively correlated with the likelihood of a restatement and internal control weakness. Overall, we document that GVs can provide a timely, ex ante signal of the reliability of accounting information, and our findings shed light on the relation between the qualitative and quantitative characteristics of financial disclosures.

Keywords: Grammatical violations, financial reporting quality, restatements, financial disclosure

JEL Classification: M40, M41

Suggested Citation

Gillette, Jacquelyn and Pundrich, Gabriel, Grammatical Violations and Financial Reporting Quality (June 1, 2020). Available at SSRN: or

Jacquelyn Gillette (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave. E62-663
Cambridge, MA 02142
United States

Gabriel Pundrich

University of Florida ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

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