Title: Accounting narratives' characteristics and firm performance in the MD&As of listed Italian companies

Authors: Helmi Hammami

Addresses: College of Business and Economics, Qatar University, P.O. Box 2713, Doha, Qatar.

Abstract: The objective of this research is to investigate the textual construction of annual reports (MD&A) of Italian listed companies. The paper builds on methodologies developed in prior empirical studies of annual reports readability and content analysis. Two dimensions are investigated: a) text ease of readability (text complexity); b) wording structure. Tests are made to measure the level of readability and wording construction of the MD&A of 40 listed companies. Results indicate that narratives are assessed as difficult to read independently of firm financial performance opening interpretations about how much attention is given to writing style in the reporting process. On the other hand, less performers seem using positive words in excess, giving too much positive colouration to their messages which may open way to several questions about intentional choice of texts and financial performance.

Keywords: financial performance; financial communication; accounting narratives; Italy; firm performance; annual reports; readability; content analysis; text complexity; writing style; financial reporting.

DOI: 10.1504/IJAF.2011.042221

International Journal of Accounting and Finance, 2011 Vol.3 No.1, pp.72 - 86

Published online: 31 Aug 2011 *

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