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Measuring annual report narratives disclosure: Empirical evidence from forward-looking information in the UK prior the financial crisis

Abed, Suzan, Al-Najjar, Basil and Roberts, Clare (2016) Measuring annual report narratives disclosure: Empirical evidence from forward-looking information in the UK prior the financial crisis. Managerial Auditing Journal, 31 (4/5). pp. 338-361. ISSN 0268-6902

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Abstract

Purpose:
This paper aims to investigate empirically the common alternative methods of measuring annual report narratives. Five alternative methods are employed, a weighted and un-weighted disclosure index and three textual coding systems, measuring the amount of space devoted to relevant disclosures.

Design/methodology/approach:
The authors investigate the forward-looking voluntary disclosures of 30 UK non-financial companies. They employ descriptive analysis, correlation matrix, mean comparison t-test, rankings and multiple regression analysis of disclosure measures against determinants of corporate voluntary reporting.

Findings:
The results reveal that while the alternative methods of forward-looking voluntary disclosure are highly correlated, important significant differences do nevertheless emerge. In particular, it appears important to measure volume rather than simply the existence or non-existence of each type of disclosure. Overall, we detect that the optimal method is content analysis by text-unit rather than by sentence.

Originality/value:
This paper contributes to the extant literature in forward-looking disclosure by reporting important differences among alternative content analyses. However, the decision regarding whether this should be a computerised or a manual content analysis appears not to be driven by differences in the resulting measures. Rather, the choice is the outcome of a trade-off between the time involved in setting up coding rules for computerised analysis versus the time saved undertaking the analysis itself.

Item Type: Article
Uncontrolled Keywords: Forward-looking information, Content analysis methods, Narrative disclosure
Subjects: H Social Sciences > HG Finance
Schools: Huddersfield Business School
Related URLs:
Depositing User: Basil Al-Najjar
Date Deposited: 14 Aug 2017 08:51
Last Modified: 14 Aug 2017 08:51
URI: http://eprints.hud.ac.uk/id/eprint/32772

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