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The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks / YIMIN WAN

Swansea University Author: YIMIN WAN

  • E-Thesis under embargo until: 6th October 2028

DOI (Published version): 10.23889/SUthesis.64677

Abstract

This quantitative thesis estimates the determinations and consequences of annual report readability using a cross-sectional sample encompassing 3086 bank years from 2000 to 2019, involving 264 listed banks across 67 countries and jurisdictions. Specifically, this thesis mainly focuses on examining i...

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Published: Swansea, Wales, UK 2023
Institution: Swansea University
Degree level: Doctoral
Degree name: Ph.D
Supervisor: Buckle, Mike J. and Elmagrhi, Mohamed H. A.
URI: https://cronfa.swan.ac.uk/Record/cronfa64677
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Specifically, this thesis mainly focuses on examining i). whether corporate governance quality has an impact on annual report readability; ii). whether bank performance affects annual report readability; and iii). whether annual report readability influences market crisis. The FOG index, the most commonly used proxy for annual report readability, is employed in this thesis to measure the bank annual report readability. It is extracted from the CFIE (Corporate Financial Information Environment) Final Structure Extractor (FRSE). Corporate governance variables are collected from BoardEx, and bank market performance data are collected from Eikon. The fundamental data of the bank is collected from SNL. Firstly, this thesis finds that board characteristics and CEO characteristics have an impact on annual report readability. More specifically, boards with more external directors, banks with Chief Risk Officers (CROs) and risk committees, and well-educated CEOs could positively influence annual report readability. Conversely, boards with older directors and directors with more qualifications, as well as banks with longer tenure, might negatively affect annual report readability. This thesis also assesses the influence of board size, CEO-chairing boards, internally hired CEOs, and CEO age on annual report readability, but no statistically significant results are found. Secondly, this thesis provides empirical evidence on the relationship between bank performance and annual report readability. By examining bank profitability and cash holdings, this thesis concludes that firms with higher profits and more stable earnings are likely to produce more readable annual reports, while banks holding more cash might have a negative relationship with annual report readability. No significantassociation is found between changes in yearly income and net interest margin with annual report readability Finally, this thesis estimates the negative impact that unreadable annual reports might have on the capital market. Proxied by bid-ask spreads, bank liquidity risk is found to be negatively affected by annual report readability. Similarly, using DCSKEW (negative conditional skewness of firm-specific weekly stock returns), DUVOL (down-to-up volatility of firm-specific weekly returns), and CRASH (a binary variable equal to one if the firm-year includes one or more negative extreme firm-specific weekly returns and zero otherwise), this thesis observes a negative relationship between bank stock price crash risk and annual report readability.</abstract><type>E-Thesis</type><journal/><volume/><journalNumber/><paginationStart/><paginationEnd/><publisher/><placeOfPublication>Swansea, Wales, UK</placeOfPublication><isbnPrint/><isbnElectronic/><issnPrint/><issnElectronic/><keywords>Annual report readability, Corporate governance, Bank performance, Market Crisis</keywords><publishedDay>20</publishedDay><publishedMonth>9</publishedMonth><publishedYear>2023</publishedYear><publishedDate>2023-09-20</publishedDate><doi>10.23889/SUthesis.64677</doi><url/><notes/><college>COLLEGE NANME</college><CollegeCode>COLLEGE CODE</CollegeCode><institution>Swansea University</institution><supervisor>Buckle, Mike J. and Elmagrhi, Mohamed H. A.</supervisor><degreelevel>Doctoral</degreelevel><degreename>Ph.D</degreename><apcterm/><funders/><projectreference/><lastEdited>2023-10-09T12:24:33.8823864</lastEdited><Created>2023-10-09T11:57:17.2010664</Created><path><level id="1">Faculty of Humanities and Social Sciences</level><level id="2">School of Management - Accounting and Finance</level></path><authors><author><firstname>YIMIN</firstname><surname>WAN</surname><order>1</order></author></authors><documents><document><filename>Under embargo</filename><originalFilename>Under embargo</originalFilename><uploaded>2023-10-09T12:05:27.0353824</uploaded><type>Output</type><contentLength>2289526</contentLength><contentType>application/pdf</contentType><version>E-Thesis</version><cronfaStatus>true</cronfaStatus><embargoDate>2028-10-06T00:00:00.0000000</embargoDate><documentNotes>Copyright: The Author, Yimin Wan, 2023.</documentNotes><copyrightCorrect>true</copyrightCorrect><language>eng</language></document></documents><OutputDurs/></rfc1807>
spelling v2 64677 2023-10-09 The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks c9062d1017471d15e890fc2c63bcf119 YIMIN WAN YIMIN WAN true false 2023-10-09 This quantitative thesis estimates the determinations and consequences of annual report readability using a cross-sectional sample encompassing 3086 bank years from 2000 to 2019, involving 264 listed banks across 67 countries and jurisdictions. Specifically, this thesis mainly focuses on examining i). whether corporate governance quality has an impact on annual report readability; ii). whether bank performance affects annual report readability; and iii). whether annual report readability influences market crisis. The FOG index, the most commonly used proxy for annual report readability, is employed in this thesis to measure the bank annual report readability. It is extracted from the CFIE (Corporate Financial Information Environment) Final Structure Extractor (FRSE). Corporate governance variables are collected from BoardEx, and bank market performance data are collected from Eikon. The fundamental data of the bank is collected from SNL. Firstly, this thesis finds that board characteristics and CEO characteristics have an impact on annual report readability. More specifically, boards with more external directors, banks with Chief Risk Officers (CROs) and risk committees, and well-educated CEOs could positively influence annual report readability. Conversely, boards with older directors and directors with more qualifications, as well as banks with longer tenure, might negatively affect annual report readability. This thesis also assesses the influence of board size, CEO-chairing boards, internally hired CEOs, and CEO age on annual report readability, but no statistically significant results are found. Secondly, this thesis provides empirical evidence on the relationship between bank performance and annual report readability. By examining bank profitability and cash holdings, this thesis concludes that firms with higher profits and more stable earnings are likely to produce more readable annual reports, while banks holding more cash might have a negative relationship with annual report readability. No significantassociation is found between changes in yearly income and net interest margin with annual report readability Finally, this thesis estimates the negative impact that unreadable annual reports might have on the capital market. Proxied by bid-ask spreads, bank liquidity risk is found to be negatively affected by annual report readability. Similarly, using DCSKEW (negative conditional skewness of firm-specific weekly stock returns), DUVOL (down-to-up volatility of firm-specific weekly returns), and CRASH (a binary variable equal to one if the firm-year includes one or more negative extreme firm-specific weekly returns and zero otherwise), this thesis observes a negative relationship between bank stock price crash risk and annual report readability. E-Thesis Swansea, Wales, UK Annual report readability, Corporate governance, Bank performance, Market Crisis 20 9 2023 2023-09-20 10.23889/SUthesis.64677 COLLEGE NANME COLLEGE CODE Swansea University Buckle, Mike J. and Elmagrhi, Mohamed H. A. Doctoral Ph.D 2023-10-09T12:24:33.8823864 2023-10-09T11:57:17.2010664 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance YIMIN WAN 1 Under embargo Under embargo 2023-10-09T12:05:27.0353824 Output 2289526 application/pdf E-Thesis true 2028-10-06T00:00:00.0000000 Copyright: The Author, Yimin Wan, 2023. true eng
title The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks
spellingShingle The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks
YIMIN WAN
title_short The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks
title_full The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks
title_fullStr The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks
title_full_unstemmed The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks
title_sort The Determinations and Consequences of Annual Report Readability: Cross-Sectional Evidence from Banks
author_id_str_mv c9062d1017471d15e890fc2c63bcf119
author_id_fullname_str_mv c9062d1017471d15e890fc2c63bcf119_***_YIMIN WAN
author YIMIN WAN
author2 YIMIN WAN
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publishDate 2023
institution Swansea University
doi_str_mv 10.23889/SUthesis.64677
college_str Faculty of Humanities and Social Sciences
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hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
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description This quantitative thesis estimates the determinations and consequences of annual report readability using a cross-sectional sample encompassing 3086 bank years from 2000 to 2019, involving 264 listed banks across 67 countries and jurisdictions. Specifically, this thesis mainly focuses on examining i). whether corporate governance quality has an impact on annual report readability; ii). whether bank performance affects annual report readability; and iii). whether annual report readability influences market crisis. The FOG index, the most commonly used proxy for annual report readability, is employed in this thesis to measure the bank annual report readability. It is extracted from the CFIE (Corporate Financial Information Environment) Final Structure Extractor (FRSE). Corporate governance variables are collected from BoardEx, and bank market performance data are collected from Eikon. The fundamental data of the bank is collected from SNL. Firstly, this thesis finds that board characteristics and CEO characteristics have an impact on annual report readability. More specifically, boards with more external directors, banks with Chief Risk Officers (CROs) and risk committees, and well-educated CEOs could positively influence annual report readability. Conversely, boards with older directors and directors with more qualifications, as well as banks with longer tenure, might negatively affect annual report readability. This thesis also assesses the influence of board size, CEO-chairing boards, internally hired CEOs, and CEO age on annual report readability, but no statistically significant results are found. Secondly, this thesis provides empirical evidence on the relationship between bank performance and annual report readability. By examining bank profitability and cash holdings, this thesis concludes that firms with higher profits and more stable earnings are likely to produce more readable annual reports, while banks holding more cash might have a negative relationship with annual report readability. No significantassociation is found between changes in yearly income and net interest margin with annual report readability Finally, this thesis estimates the negative impact that unreadable annual reports might have on the capital market. Proxied by bid-ask spreads, bank liquidity risk is found to be negatively affected by annual report readability. Similarly, using DCSKEW (negative conditional skewness of firm-specific weekly stock returns), DUVOL (down-to-up volatility of firm-specific weekly returns), and CRASH (a binary variable equal to one if the firm-year includes one or more negative extreme firm-specific weekly returns and zero otherwise), this thesis observes a negative relationship between bank stock price crash risk and annual report readability.
published_date 2023-09-20T12:24:35Z
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score 11.036116

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