Title: Textual information disclosures and banks' financial performance: evidence from emerging economies

Authors: Javid Iqbal; Faheem Aslam; Fasih Ahmed

Addresses: Department of Management Sciences, COMSATS University Islamabad, Islamabad, Pakistan ' College of Business and Entrepreneurship, Abdullah Al Salem University, Kuwait ' Faculty of Language Studies, Sohar University, Oman

Abstract: We investigate the link between management's willingness for transparent information disclosures and financial performance. The study employs data from 61 banks of 16 emerging economies covering a period of 2007-2022. Using the system GMM, the results align with the obfuscation hypothesis, which suggests that the management of the banks complicates the textual information to disclose bad future performance. Our results are robust as we use multiple complexity indexes to verify the results. In addition, we also deal with endogeneity problems that are inherent in the panel data. The study demonstrates that the predictive models should not be based on only financial data. In addition, the textual disclosures provide additional sources of information to be incorporated into the model for more accurate predictions. The primary contribution of the study is that it may benefit shareholders by helping reduce asymmetric information between them and the management (agency problem). This study provides guidelines to regulators and other stakeholders for understanding the textual complexity in banks' annual reports as early warnings of bad performance and mitigating the severity of the problem.

Keywords: information asymmetry; text complexity; disclosures; performance predictions; emerging economies; system GMM.

DOI: 10.1504/IJEV.2025.151376

International Journal of Entrepreneurial Venturing, 2025 Vol.17 No.3, pp.274 - 297

Accepted: 18 Aug 2025
Published online: 26 Jan 2026 *

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