Communication from the board of directors: An empirical study on readability in Spanish language on Sustainability Reporting

Abstract

This article analyses the readability of the communication in Spanish language from the board of directors based on the study of narrative texts at Sustainability Reports of IBEX35 companies, which includes the 35 largest listed companies in Spain given their market capitalization. It undertakes an empirical study with two purposes: first, to describe the readability scale of these texts, and second, to ascertain whether or not compliance on sustainability influences the readability of disclosure. The study was carried out on the narrative texts of six GRI data standards related to compliance with laws and regulations, included in 116 Sustainability Reports of IBEX35 Spanish-listed companies in the period 2015-2018. Readability was measured using two indices for Spanish language readability: the Fernandez-Huerta and the Inflesz indices. These indices are based on the Flesch Reading Ease Formula for English narrative texts. Findings suggest that communication from the board concerning Sustainability Reports needs improvement since, in general, these reports are difficult to read. Finding also suggest that compliance with GRI standards could be related to low readability difficulty of reports and non-compliance to high readability difficulty.