The DOI matches its Crossref record; 71 of the 71 references it cites were found in a registry or an index.
Readability of 10‐K Reports and Stock Price Crash Risk
Abstract
This study shows that less readable 10‐K reports are associated with higher stock price crash risk. The results are consistent with the argument that managers can successfully hide adverse information by writing complex financial reports, which leads to stock price crashes when the hidden bad news accumulates and reaches a tipping point. Cross‐sectional analyses show that the effect of financial reporting complexity on crash risk is more pronounced for firms with persistent negative earnings news or transitory positive earnings news, greater chief executive officer stock option incentives, or lower litigation risk. Finally, accrual manipulation appears to be positively related to crash risk, even since the Sarbanes‐Oxley Act, if the manipulation is accompanied by complex 10‐K reports.
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Cites
Biases in dynamic models with fixed effects
Nickell, S. (1981) · Econometrica · doi:10.2307/1911408 · Cited by 8,735
When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10‐Ks
LOUGHRAN, T., & MCDONALD, B. (2011) · The Journal of Finance · doi:10.1111/j.1540-6261.2010.01625.x · Cited by 6,015
The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors
Dechow, P. M., & Dichev, I. D. (2002) · The Accounting Review · doi:10.2308/accr.2002.77.s-1.35 · Cited by 5,152
Selection on observed and unobserved variables: Assessing the effectiveness of Catholic schools
Altonji, J. G., Elder, T. E., & Taber, C. R. (2005) · Journal of Political Economy · doi:10.1086/426036 · Cited by 3,706
On the impossibility of informationally efficient markets
Stiglitz, J. E., & Grossman, S. J. (1980) · Columbia University · doi:10.7916/d8765r99 · Cited by 3,645
How does financial reporting quality relate to investment efficiency?
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2009.09.001 · Cited by 3,214
The market pricing of accruals quality
Francis, J., LaFond, R., Olsson, P., & Schipper, K. (2005) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2004.06.003 · Cited by 3,087
Annual report readability, current earnings, and earnings persistence
Li, F. (2008) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2008.02.003 · Cited by 2,838
R2 around the world: New theory and new tests☆
JIN, L., & MYERS, S. (2006) · Journal of Financial Economics · doi:10.1016/j.jfineco.2004.11.003 · Cited by 2,816
Opaque financial reports, R2, and crash risk☆
Hutton, A. P., Marcus, A. J., & Tehranian, H. (2009) · Journal of Financial Economics · doi:10.1016/j.jfineco.2008.10.003 · Cited by 2,768
Cited by
Loughran, T., & McDonald, B. (2020) · Annual Review of Financial Economics · doi:10.1146/annurev-financial-012820-032249 · Cited by 266
How to talk when a machine is listening: Corporate disclosure in the age of AI
Cao, S., Jiang, W., Yang, B., & Zhang, A. L. (2023) · The Review of Financial Studies · doi:10.1093/rfs/hhad021 · Cited by 222
Metadata
- Authors
- Kim, C. (., Wang, K., & Zhang, L.
- Venue
- Contemporary Accounting Research
- Publisher
- Wiley
- Published
- 2019-04-26
- Volume
- 36
- Issue
- 2
- Pages
- 1184-1216
- ISSN
- 0823-9150 (ISSN-L)
- 1911-3846
- OpenAlex
- W3022848728
- Cited by
- 425
- References
- 71
- FWCI
- 61.80
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
