June 22, 2006
Plain English?
Posted by Fred Tung

Tyler Cowan over at Marginal Revolution reports on a new paper that explains why corporate reports are so hard to read.  In the face of the SEC's plain English disclosure rules, Feng Li, an accounting professor at Michigan, finds in Annual Report Readability, Earnings and Stock Returns, that annual reports of underperforming companies are harder to read than companies performing well.  Li measures readability by examining syllables per word and words per sentence in more than 55,000 annual reports.

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