Readabilty in management reports: extension and good governance practices

Abstract

La legibilidad en los informes de gestión: extensión y buenas prácticas de gobierno corporativo. Este estudio expande el conocimiento sobre la legibilidad de los informes contables, su extensión y el cumplimiento de las empresas con las prácticas de buen gobierno. También cubre un vacío en el análisis de la legibilidad de la información narrativa escrita en español. Examinamos la legibilidad en los Informes de Gestión de las empresas españolas que cotizan en el Mercado Continuo de la Bolsa de Madrid durante el período 2010-2016. Los resultados revelan que los informes de gestión más extensos, es decir, aquellos con mayor cantidad de texto, son los menos legibles, y que el uso de elementos visuales en los informes ayuda a mejorar su legibilidad. Además, las empresas que siguen prácticas de buen gobierno, emiten información compleja con claridad, velocidad y simplicidad, lo que mejora la legibilidad de los informes contables. This study expands our knowledge about the readability of accounting narratives, their extension and companies’ compliance with good governance practices. It also covers a gap in the analysis of the readability of narrative information written in Spanish. We examined the readability in Management Reports of Spanish companies listed on the Continuous Market of the Madrid Stock Exchange during the period 2010–2016. The results reveal that the most extensive management reports — that is, those with the greatest quantities of text — are the least readable and that the use of visual elements in reports helps to improve their readability. Moreover, companies that follow good governance practices issue complex information with clarity, speed, and simplicity, which improves the readability of accounting narratives.

Different Leaders in a COVID-19 Scenario: CEO Altruism and Generous Discourse

“…According to the theory of social psychology, self-verification is typical of managers who want to be known and understood by others according to their firm beliefs and feelings about themselves, including their sense of self and self-esteem. Similar results were obtained by Phan et al [91], García-Sánchez et al [92], Melón-Izco et al [93], Capela-Borralho et al [94] and Parra-Domínguez et al [95], authors who found the existence of a neutral discourse when companies report on their commitments to the 2030 Agenda, the content of management report or a CSR coupling in the case of family firms reporting.…”

Are institutional investors “in love” with the sustainable development goals? Understanding the idyll in the case of governments and pension funds

“…In this sense, as Yamane and Kaneko (2021) showed, raising stakeholder awareness of the SDGs leads private companies to engage in SDG implementation. In particular, due to the increase in the institutional investors' participation in listed companies' ownership, which ascends to more than 40% (Organisation for Economic Co‐operation and Development ‐ OECD, 2020), they significantly influence corporate strategies, including SDG engagement and reporting (Calza et al, 2016; García‐Sánchez, Rodríguez‐Ariza, Aibar‐Guzmán, & Aibar‐Guzmán, 2020; Hadro et al, 2021; Jonsdottir et al, 2021; Melón‐Izco et al, 2021).…”

“…In this sense, as Yamane and Kaneko (2021) showed, raising stakeholder awareness of the SDGs leads private companies to engage in SDG implementation. In particular, due to the increase in the institutional investors' participation in listed companies' ownership, which ascends to more than 40% (Organisation for Economic Co-operation and Development -OECD, 2020), they significantly influence corporate strategies, including SDG engagement and reporting (Calza et al, 2016;Hadro et al, 2021;Jonsdottir et al, 2021;Mel on-Izco et al, 2021). Indeed, introduced in April 2006, the United Nations Principles for Responsible Investment (UN PRI) establish commitments to incorporate social, environmental, and governance criteria into investment decisions (Cohen et al, 2011), encouraging Socially Responsible Investment (SRI) and investors' activism to promote sustainability in the companies in which they invest (García-Sánchez, Aibar-Guzmán, & Aibar-Guzmán, 2020).…”

Analysis of the Dialogue with Stakeholders by the IBEX 35 Companies

“…The procedure used to obtain the information necessary to achieve our objective was based on content analysis [47][48][49] from publicly available information from the sample companies' corporate websites. The main sources of information were annual reports, integrated reports, CSR reports, sustainability reports, corporate governance reports, conduct codes, and specific sections of the companies' websites related to employees, suppliers, customers, and shareholders.…”