우리말 사업보고서 가독성 연구의 가능성에 대한탐색적 연구

This paper assesses feasibility of annual report readability research in Korea. Using three different readability measures commonly used in accounting and finance literature (e.g., Flesch ease index, Fog index, and the length of annual report), we find that firms with lower earnings make their annual reports more complex and thus less readable. Additionally, we find that firms with less readable annual reports have less persistent positive earnings. We also present evidence consistent with prior studies that annual reports are less readable for firms just meeting or beating earnings benchmarks. Furthermore, the relation between annual report readability and corporate earnings is attenuated after IFRS adoption. Lastly, to check the validity of annual report readability measures estimated by using the Korean alphabets, we re-estimate our main analyses using alternative annual report readability measures (e.g., alternative Fog indices, average sentence length, and file size of annual reports); these results are robust to the alternative readability measures. In sum, we provide first large sample evidence of how annual report readability is related to attributes of corporate earnings in Korea, thereby being suggestive of feasibility of annual report readability research in Korea. Keywords: Annual report