Annual Report Readability and Stock Liquidity

Sabri Boubaker, Dimitrios Gounopoulos, Hatem Rjiba

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We examine the effect of annual report textual complexity on firms’ stock liquidity. Using techniques from computational linguistics, we predict and find that less readable filings are associated with lower stock liquidity. Our study provides evidence that difficult-to-read annual reports hinder investors’ ability to process and analyze information contained in corporate annual reports, reducing thereby their willingness to trade which decreases stock liquidity. Our findings are robust to a battery of sensitivity tests, including endogeneity, use of alternative estimation techniques, and use of alternative liquidity and readability proxies.
Original languageEnglish
JournalFinancial Markets, Insitutions and Instruments
Early online date5 Mar 2019
DOIs
Publication statusE-pub ahead of print - 5 Mar 2019

Cite this

Annual Report Readability and Stock Liquidity. / Boubaker, Sabri; Gounopoulos, Dimitrios; Rjiba, Hatem.

In: Financial Markets, Insitutions and Instruments, 05.03.2019.

Research output: Contribution to journalArticle

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