The Readability of the Management Discussion and Analysis Section and Footnotes of 10-Ks: The Case of the Gas and Oil Industry

Abstract

The Gas and Oil industry, of which individuals own 65.5% of the stock, is a key sector of the U.S. economy. (Shapiro and Pham, 2014) Readable information on this industry is important to the U.S. economy and individuals particularly regarding retirement fund decisions. Determining the reading level of the Management Discussion and Analysis Section (MDA) and footnotes of the 10-K for the oil and gas industry is the purpose of this study. The MDAs’ average Flesch Index was 12.93. The footnotes’ average Flesch Index was 12.57. Given these scores and the average reading level of adults most are unable to understand them.