Readability Of Reports Research Articles

Do Co‐Opted Boards Lead to Managerial Obfuscation? Evidence From the 10‐K Report Readability

ABSTRACTThis paper examines the relationship between board co‐option and managerial obfuscation captured through linguistic complexity of 10‐K reports. Using 7912 US firm‐year observations from 2003 to 2018, we find that firms with a higher proportion of co‐opted directors obfuscate the readability of the 10‐K reports. The findings are robust across various variable definitions, sample specifications and remain significant after addressing endogeneity concerns through multiple approaches, including lead‐lag regression, entropy balancing, instrumental variable analysis, the system GMM, and difference‐in‐difference estimations. Further analysis reveals that our main finding is driven by firms with weak internal (i.e., those with high CEO power and low board meeting attendance) and external (i.e., those with low institutional ownership and less analyst following) monitoring. The paper provides useful policy insights and implications for investors, regulators, and policymakers.

Visual annual reports and stock price crash risk

AbstractUsing a sample of Chinese A‐Share listed companies during 2018–2023, we explore the influence of visual annual reports (VARs) on stock price crash risk. The results suggest that VARs are negatively associated with crash risk, and several robustness and endogeneity examinations validate our primary findings. Mechanism analyses reveal that reduced information asymmetry and increased internal control quality may serve as potential pathways through which VARs influence crash risk. Additionally, cross‐sectional examinations suggest that the negative relation between VARs and crash risk is more pronounced for companies with poor annual report readability and limited external monitoring.

Audit report readability and information efficiency: evidence from the Tehran Stock Exchange

Audit report readability and information efficiency: evidence from the Tehran Stock Exchange

Evaluation of Multi-Lingual Simplifications of IR Procedural Reports Using GPT-4.

This study assesses the feasibility of Large Language Models like GPT-4 (OpenAI, San Francisco, CA, USA) to summarize interventional radiology (IR) procedural reports to improve layperson understanding and translate medical texts into multiple languages. 200 reports from eight categories were summarized using GPT-4. Readability was assessed with Flesch-Kincaid Reading Level (FKRL) and Flesch Reading Ease Score (FRES). Accuracy was assessed by 8 IRs. Summaries were translated into Spanish, Korean, Chinese, and Swahili and their accuracy were assessed by eight bilingual IRs. The original reports' FKRL of 10.7 and FRES of 41.9 improved to 7.0, and 73.0, respectively. Summaries were mostly accurate, with minimal misinformation. Translations introduced an increase in number of misinformation but no significant increase in critically wrong information. Layperson comprehension scores improved significantly from 2.5 to 4.3 out of 5 after summarization. Overall, GPT-4 enhanced report readability and comprehension, suggesting potential for broader application in improving patient communication.

AI in Dental Radiology-Improving the Efficiency of Reporting With ChatGPT: Comparative Study.

Structured and standardized documentation is critical for accurately recording diagnostic findings, treatment plans, and patient progress in health care. Manual documentation can be labor-intensive and error-prone, especially under time constraints, prompting interest in the potential of artificial intelligence (AI) to automate and optimize these processes, particularly in medical documentation. This study aimed to assess the effectiveness of ChatGPT (OpenAI) in generating radiology reports from dental panoramic radiographs, comparing the performance of AI-generated reports with those manually created by dental students. A total of 100 dental students were tasked with analyzing panoramic radiographs and generating radiology reports manually or assisted by ChatGPT using a standardized prompt derived from a diagnostic checklist. Reports generated by ChatGPT showed a high degree of textual similarity to reference reports; however, they often lacked critical diagnostic information typically included in reports authored by students. Despite this, the AI-generated reports were consistent in being error-free and matched the readability of student-generated reports. The findings from this study suggest that ChatGPT has considerable potential for generating radiology reports, although it currently faces challenges in accuracy and reliability. This underscores the need for further refinement in the AI's prompt design and the development of robust validation mechanisms to enhance its use in clinical settings.

CEO social capital and the readability of 10-K reports

This paper examines how CEO social capital affects the readability of 10-K reports. Drawing on social capital theory, we show that firms led by CEOs with higher social capital, measured in terms of their centrality within their social networks, tend to issue less readable reports. Cross-sectional analysis reveals that this association becomes more prominent when CEOs are more influential and powerful, when their peers more often issue less readable reports, suggesting the existence of contagion within the social network, and when they operate in competitive industries, supporting the evidence that less readable reports are used to avoid losing competitive advantages. Collectively, our results show that CEO social capital can shape the linguistic quality of corporate disclosure and forms an important determinant of 10-K report readability. Overall, we contribute to the literature by highlighting that social capital does not necessarily lead to better financial reporting quality. Instead, it can lead to the adoption of opportunistic behaviours aimed at masking firms’ fundamental accounting information.

Beat around the bush: earnings management, CSR spending and CSR report readability

Purpose The purpose of this paper is to investigate the relationship between corporate social responsibility (CSR) report readability and earnings management (EM). Additionally, the authors examine the association between CSR spending and CSR report readability to understand the clarity in disclosure when the firms’ investment in CSR is higher. Design/methodology/approach The sample for this study consists of 156 publicly traded firms in India spanning 2016–2021. The authors use the Fog Index to measure the readability of CSR reports and absolute discretionary accruals and absolute accrual EM as the proxy for EM. The empirical models are tested using a two-stage system GMM dynamic panel data model. Findings The authors find a negative association between the Fog Index and EM, indicating that the readability of CSR reports decreases when EM increases in a firm. Managers use complex words to mislead the stakeholders when there are more EM practices. The authors’ additional analysis shows a positive association between CSR spending and CSR report readability, indicating that the firm spends more reports on the initiatives more precisely, avoiding words with more syllables. Originality/value This study offers novel evidence by examining the readability of CSR reports published by Indian firms. Given the mandatory requirement of CSR in India, the readability of disclosures is associated with EM. The authors’ unique focus on CSR report readability provides a new direction for future researchers as they can explore the influence of regulatory mandates on CSR reporting practices.

Annual report readability, ESG disclosure, and risk perspectives of Indian firms: the mediating role of corporate governance and earnings management

Annual report readability, ESG disclosure, and risk perspectives of Indian firms: the mediating role of corporate governance and earnings management

Evaluating Board Characteristics’ Influence on the Readability of Annual Reports: Insights from the Egyptian Banking Sector

This study aims to examine the impact of board characteristics (BCs) on banks’ annual reports readability (BARR). Further, it examines whether bank size (BS) moderates the association between BC and BARR. The study employs a sample of 208 bank-year observations from both listed and non-listed banks in the Egyptian stock exchange (EGX), utilizing data spanning from 2016 to 2023. The study employs a random-effect regression model to test the hypotheses and discuss the results. The results suggest that BARR has a significant association with board meetings, gender and cultural diversity. Furthermore, BS played a moderating role in determining the association between BCs and BARR, supporting the second hypothesis. The findings show that the BCs and disclosure quality differ for banks of varying sizes. The findings have practical implications for the Egyptian banking sector, highlighting that board structure is critical to transparency and maintaining public trust. Additionally, the results focus policymakers’ attention on standardizing the contents and structure of banks’ annual reports, with the aim of reducing managers’ manipulation of disclosures and reducing the level of information asymmetry between stockholders, as suggested by the agency theory.

Effect of earnings management and cash holdings on annual report readability: Evidence from top Indian companies

The present study explores the impact of earnings management on the readability of management discussion and analysis (MDA) section of annual reports of 384 Indian firms for 1,160 firm-years. It also explores the moderating behaviour of cash in explaining the association between earnings management and MDA readability. Using fixed-effect regression, the study finds that firms that manage earnings by meeting or just beating the previous year earnings publish complex MDAs. Moreover, it documents the positive moderating role of cash in explaining this relationship. Multiple robustness tests confirm our findings across different years including the COVID-19 crisis period.

Community Perspectives on Psychological Assessment Reports for Autistic Young Adults.

Clinicians rarely solicit community feedback on psychological assessment reports. This study addresses this knowledge gap to: (1) improve the usefulness of reports for patients and families, (2) increase access to needed services, and (3) make reports accessible for autistic people and their families. An autistic researcher and a non-autistic researcher jointly conducted qualitative interviews with autistic young adults, caregivers, and a service provider. Participants read a de-identified psychological assessment report about an autistic young adult with intellectual disability seeking resources for his transition to adulthood. Participants provided feedback about (1) how easy the report was to read, (2) how useful the report seemed, and (3) perceptions of language (i.e., empowering/offensive/neutral). Autistic young adults, caregivers, and the service provider all expressed a desire for short and clear reports in bulleted format. Caregivers stressed the importance of (1) using simple language to describe diagnostic testing and (2) including comprehensive resources, and autistic young adults expressed the importance of (1) including information about daily routines, habits, and interests and (2) giving patients' long-term goals the same consideration as caregivers' long-term goals. We highlight that standard psychological assessment reports have not effectively met the needs of autistic people and family members. Autistic people and caregivers prefer brief reports written in plain language that include more information about the patients' interests, routines, and preferences and less detailed information about psychological tests. Our findings identify ways to improve the usefulness and readability of psychological assessment reports for autistic people.

Clarity in Crisis: How UK Firms Communicated Risks during COVID-19

This study explores the influence of risk disclosure levels and types on the readability of annual reports of non-financial firms in the UK during the COVID-19 outbreak. It further investigates how the disclosure of COVID-19-related information moderates the relationship between risk disclosure and readability. The study uses a content analysis approach and CFIE software to measure the level of risk disclosure and readability in the annual reports of non-financial firms listed on the FTSE all-share from 2019 to 2021. The results show a positive and significant effect of risk disclosure level on readability, which is stronger for firms that disclosed COVID-19 information. Different types of risk disclosure have varying effects on readability, with COVID-19 risk, credit risk, and strategic risk positively affecting readability, while operational risk negatively affects it. The study contributes to the literature on information asymmetry and institutional theory by demonstrating how risk disclosure and readability are influenced by external factors like the COVID-19 outbreak and internal factors such as firm characteristics and types of risks. It introduces a new risk definition and category specific to the COVID-19 pandemic and develops new measurements for risk disclosure, including credit, liquidity, market, operational, business, strategic, and COVID-19 risks. The study provides valuable insights for managers, investors, regulators, and standard setters on the relationship between risk disclosure and readability in annual reports. It highlights the importance of disclosing COVID-19-related information to enhance the readability and understandability of financial communication. The paper contributes to the literature and practice on risk disclosure, readability, and financial communication during crises.

From Jargon to Clarity. Improving the Readability of Foot and Ankle Radiology Reports with An Artificial Intelligence Large Language Model

Category: Other; Ankle Introduction/Purpose: The purpose of this study was to evaluate the efficacy of an Artificial Intelligence Large Language Model (AI-LLM) at improving the readability foot and ankle orthopedic radiology reports. Methods: The radiology reports from 100 foot or ankle X-Rays, 100 computed tomography (CT) scans and 100 magnetic resonance imaging (MRI) scans were randomly sampled from the institution’s database. The following prompt command was inserted into the AI-LLM. “Explain this radiology report to a patient in layman's terms in the second person. [Report Text]”. The mean report length, Flesch reading ease score (FRES) and Flesch-Kincaid reading level (FKRL) were evaluated for both the original radiology report and the AI-LLM generated report. The accuracy of the information contained within the AI-LLM report was assessed via a 5-point Likert scale. Additionally, any “hallucinations” generated by the AI-LLM report were recorded. Results: There was a statistically significant improvement in mean FRES scores in the AI-LLM generated X-Ray report (33.8±6.8 to 72.7±5.4), CT report (27.8±4.6 to 67.5±4.9) and MRI report (20.3±7.2 to 66.9±3.9), p< 0.001. There was also a statistically significant improvement in mean FKRL scores in the AI-LLM generated X-Ray report (12.2±1.1 to 8.5±0.4), CT report (15.4±2.0 to 8.4±0.6) and MRI report (14.1±1.6 to 8.5±0.5), p< 0.001. Superior FRES scores were observed in the AI-LLM generated X-Ray report compared to the AI-LLM generated CT report and MRI report, p< 0.001. The mean Likert score for the AI-LLM generated X-Ray, CT and MRI report was 4.0±0.3, 3.9±0.4, and 3.9±0.4, respectively. The hallucination rate in the AI-LLM generated X-Ray report, CT report and MRI report was 4%, 7% and 6%, respectively. Conclusion: AI-LLM was an efficacious tool for improving the readability of foot and ankle radiological reports across multiple imaging modalities. Superior FRES scores together with superior Likert scores were observed in the X-Ray AI-LLM reports compared to the CT and MRI AI-LLM reports. This study demonstrates the potential use of AI-LLMs as a new patient-centric approach for enhancing patient understanding of their foot and ankle radiology reports.

The impact of stock market liberalization on management forecast precision–Evidence from Mainland-Hong Kong Stock Connect Programs in China

This study examines the effects of stock market liberalization, specifically through the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect initiatives (jointly referred to as MHKSCPs), on the precision of management forecasts and the underlying mechanisms. We find that post MHKSCPs, management forecasts become less precise for bad news and more precise for good news, leading to an overall decrease in precision. The channels include litigation risk and media/analyst attention. The results are particularly pronounced in firms without foreign investors, within industries with higher proprietary costs, or in smaller firms. Moreover, there is a decrease in the information content of management forecasts, management forecast optimism, and financial report readability post MHKSCPs.

Earnings management, key audit matters and audit report readability

PurposeAccording to the management obfuscation hypothesis, managers have incentives to influence the audit reports’ communicative value. This study aims to examine the relationship between corporate earnings management and the readability of Chinese-text audit reports and the impact of key audit matter (KAM) disclosure requirements on this relationship.Design/methodology/approachThis research adopts Taiwanese firms from 2010 to 2019 to investigate the association between earnings management and readability of Chinese-text audit reports within the framework of the KAM disclosure requirements implemented in 2016.FindingsThe findings show that auditors tend to issue less readable audit reports to firms undertaking earnings management, particularly after introducing KAM disclosures. Additional analyses indicate that such adverse impacts of client earnings management on audit report readability have become more pronounced for firms audited by a newly pointed or long-tenure lead audit partner, with high business risk, poor monitoring of governance mechanisms or a large amount of nonaudit services. These results suggest that auditor partners may compromise auditor independence and use flexible narratives in audit reports as a form of moral insurance.Practical implicationsAs auditors may manage audit report readability to reduce audit liability, authorities must formulate policies concerning audit report disclosure to strengthen its communicative value and simplify language usage. Additionally, authorities should strengthen quality control standards concerning auditor independence to reduce auditor pressure from clients’ economic importance.Originality/valueThis study provides valuable insights into auditors' responses to corporate earnings management behavior, particularly regarding the interplay between earnings management, audit report quality and regulatory changes, thus expanding our understanding of the dynamics within the auditing profession.

Decoding Radiology Reports: Artificial Intelligence-Large Language Models Can Improve the Readability of Hand and Wrist Orthopedic Radiology Reports.

The purpose of this study was to assess the effectiveness of an Artificial Intelligence-Large Language Model (AI-LLM) at improving the readability of hand and wrist radiology reports. The radiology reports of 100 hand and/or wrist radiographs, 100 hand and/or wrist computed tomography (CT) scans, and 100 hand and/or wrist magnetic resonance imaging (MRI) scans were extracted. The following prompt command was inserted into the AI-LLM: "Explain this radiology report to a patient in layman's terms in the second person: [Report Text]." The report length, Flesch reading ease score (FRES), and Flesch-Kincaid reading level (FKRL) were calculated for the original radiology report and the AI-LLM-generated report. The accuracy of the AI-LLM report was assessed via a 5-point Likert scale. Any "hallucination" produced by the AI-LLM-generated report was recorded. There was a statistically significant improvement in mean FRES scores and FKRL scores in the AI-LLM-generated radiograph report, CT report, and MRI report. For all AI-LLM-generated reports, the mean reading level improved to below an eighth-grade reading level. The mean Likert score for the AI-LLM-generated radiograph report, CT report, and MRI report was 4.1 ± 0.6, 3.9 ± 0.6, and 3.9 ± 0.7, respectively. The hallucination rate in the AI-LLM-generated radiograph report, CT report, and MRI report was 3%, 6%, and 6%, respectively. This study demonstrates that AI-LLM effectively improves the readability of hand and wrist radiology reports, underscoring the potential application of AI-LLM as a promising and innovative patient-centric strategy to improve patient comprehension of their imaging reports.Level of Evidence: IV.

Financial report readability and audit fees: Evidence from China

Financial report readability and audit fees: Evidence from China

The role of female directors in family firms’ annual report´s readability

PurposeThis paper investigates the impact of board gender diversity on the readability of the annual reports of family-controlled public companies.Design/methodology/approachGrounded in the premises of the restricted and extended views of the socioemotional wealth (SEW) approach and executive power theory, this paper explores the ways in which family-affiliated female directors influence report readability in a sample of 133 publicly traded US companies listed in the Fortune 1,000. We use the system GMM estimator, which deals with two key sources of endogeneity by controlling first for reverse causality, using the lags of the endogenous variables as instruments, and then for omitted variables, capturing the individual effect.FindingsOur analysis confirms that the significant enhancement in annual report readability is associated with the presence of female family directors, particularly those who are insiders within the company. In contrast, non-family female directors and family outsider directors appear to have a negative impact on annual report readability.Originality/valueWhile scholars have increasingly focused on variations in annual report readability among family firms, the contribution of female directors to this phenomenon has received minimal attention. In our study, we integrate the theories of restricted and extended SEW perspectives with the theory of women’s executive power within the board. This integration is essential for considering two critical factors: firstly, the primacy of their SEW objectives, and, secondly, their legitimacy within the board.

Does Readability of Textual Disclosures in Modern Slavery Reports Pay Off? Evidence from a Regulatory Setting

This study examines the association between textual disclosure readability in modern slavery reports and firm value. Using 212 Australian modern slavery statements for the financial year 2019–2020, a positive association is found between more readable textual disclosures in modern slavery reports and firm value. The study also finds that an optimistic tone in textual disclosures and better firm-level corporate governance accentuate this impact. Further analysis shows that the informative information component of textual disclosures in modern slavery reports is positively priced by investors. Our study’s findings contribute to the debate on why firms should consider improving the textual disclosure readability of modern slavery reports. The study also informs various regulators (e.g. Australian Border Force, Australian Securities and Investments Commission [ASIC], European Union [EU] and United Kingdom [UK] government agencies, etc.) and international organisations about firm-level efforts to promote high-quality reporting on the modern slavery risk.

Impact of text difficulty and visual emphasis on pediatric neuropsychological evaluation reports: The parent’s perspective

Objective: Despite varying opinions, little research has examined how to best write pediatric neuropsychology reports. Method: This study gathered input from 230 parents on how text difficulty (reading level) and visual emphasis (bullets, underline, italics) affect report readability and utility. We focused on the most-read report section: summary/impressions. Each parent rated the readability and usefulness of a generic summary/impressions section written in four different styles. The four styles crossed text difficulty (high school-vs-collegiate) with use of visual emphasis (absent-vs-present). Results: Parents found versions with easier text to be more clearly written, easier to follow, and easier to find information (p<.001). Parents rated those with harder text to be overly detailed, complex, hard to understand, and hard to read (p<.001). Visual emphasis made it easier to find key information and the text easier to follow and understand – but primarily for versions that were written in difficult text (interaction p≤.026). After rating all four styles, parents picked their preference. They most often picked versions written in easier text with visual emphasis (p<.001). Conclusions: Findings support writing styles that use easier text difficulty and visual emphasis.