Grammatical Errors and Financial Reporting Quality *

37 Pages Posted: 17 Dec 2019 Last revised: 12 Jun 2024

See all articles by Jacquelyn Gillette

Jacquelyn Gillette

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

Gabriel Pundrich

University of Florida

Date Written: June 12, 2024

Abstract

We examine whether grammatical errors (GEs) in annual financial reports (10-Ks) provide a timely signal of financial reporting quality. Consistent with the notion that GEs capture the time, effort, and resources devoted to financial filings, GEs are less common after firms invest more in financial reporting technology. Further, GEs are more common when firms have less time to prepare their financial reports. Importantly, GEs are positively associated with the likelihood of a future restatement and the discovery of an internal control weakness. Collectively, we find that GEs can provide a timely, ex ante signal of the reliability of firms' financial information.

Keywords: JEL Classifications: M40, M41 Grammatical errors, restatements, financial disclosure

JEL Classification: M40, M41

Suggested Citation

Gillette, Jacquelyn and Pundrich, Gabriel, Grammatical Errors and Financial Reporting Quality * (June 12, 2024). Available at SSRN: https://ssrn.com/abstract=3496434 or http://dx.doi.org/10.2139/ssrn.3496434

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

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