Guiding through the Fog: Does annual report readability reveal earnings management?
| dc.contributor.author | Aymen AJina | |
| dc.date.accessioned | 2025-06-15T07:18:44Z | |
| dc.date.issued | 2016 | |
| dc.description.abstract | Corporate disclosure usually involves three elements: content (what), timing (when) and presentation (how) (Courtis, 2004), the usefulness of which depends on readability and understandability. Thus, according to the Act NRE-New Economic Regulations- (2001), we expected a bolstering of the regulations and the recommendations in favor of the readability of the information emitted within financial communication. The objective of this article is to give a perspective on an issue that is seldom researched in France and relative to theimpact of earnings management on annual report readability. The extant literature is not convergent. The results obtainedin various contexts or in the United States are not similar, given the differences in institutional settings among countries. The study was conducted on the French stock market between 2010 and 2013 and includes 163 firms listed on the CACALL shares index. We assess the readability of annual reports using the Gunning-Fog Index and earnings management is measured by discretionary accruals estimated using the models of Dechow et al. (1995) and Raman and Shahrur (2008). Our results show the existence of a positive and significant relation between the level of discretionary accounting adjustments and Fog Index. In fact, companies managing their earnings tend to make annual report readability more complex. In this way, we also find a significant link between the Fog Index and the other financial indicators of our model (Ownership dispersion, Profitability, Leverage and Firm size), so supporting our main result. | |
| dc.identifier.uri | https://research.arabeast.edu.sa/handle/123456789/46 | |
| dc.language.iso | en | |
| dc.publisher | Research in International Business and Finance | |
| dc.title | Guiding through the Fog: Does annual report readability reveal earnings management? | |
| dc.type | Article |