How plain English use affects the length of annual reports: Evidence from the annual reports of foreign firms listed on the US stock exchange |
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| Affiliation: | 1. University of Economics, The University of Danang, 71 Ngu Hanh Son, Danang, Viet Nam;2. Graduate School of International Social Sciences, Yokohama National University, 79-1 Tokiwadai, Hodogaya-ku, Yokohama 240-8501, Japan;1. Department of Accounting, Finance, and Economics, University of Nebraska-Kearney, United States;2. School of Accountancy, University of Nebraska-Lincoln, United States;1. Trier University, Universitätsring 15, 54296 Trier, Germany;2. Lancaster University Management School, Bailrigg, Lancaster LA1 4YX, United Kingdom;3. Erasmus School of Economics, Burgemeester Oudlaan 50, 3062 PA Rotterdam, the Netherlands;1. University of Rome “Niccolò Cusano”, Via Don Carlo Gnocchi 3, 00166 Rome, Italy;2. University of Naples “Federico II”, Monte S. Angelo University Campus, via Cinthia, Napoli, Italy;3. LUISS University, Viale Romania 32, 00197 Rome, Italy;4. IULM University, Via Carlo Bo 8, 20143 Milano, Italy |
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| Abstract: | This study examines the impacts of plain English on the length of annual reports for the sample of 20-F forms which are annually filed by foreign firms listed on NYSE and NASDAQ. We found out that foreign firms have better complied with plain English in their disclosures over time with shorter sentences, less jargon, and readable writing styles; however, there was a significant increase in the length of 20-F from 2004 to 2013. We also recognize the impacts of plain English on the length of annual reports are mixed. The issuers may completely improve the readability of annual reports without significantly increasing the length of annual reports if they sophisticatedly combine all four elements of plain English in their disclosures. Additionally, the usage of passive voice and jargon in firms’ disclosures negatively influences the liquidity of stocks. There are significant differences in behaviors of issuing annual reports among countries. After the financial crisis in 2009, annual reports become longer and less readable. |
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| Keywords: | 20-F Length of annual reports Plain English |
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