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Repaying the trust: social trust and the readability of form 10-K reports

Mussa Hussaini Orcid Logo, Tanveer Hussain Orcid Logo, Tunyi Tunyi Abongeh Orcid Logo, Reon Matemane Orcid Logo

Journal of Accounting Literature, Pages: 1 - 36

Swansea University Author: Tunyi Tunyi Abongeh Orcid Logo

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DOI (Published version): 10.1108/jal-12-2024-0379

Abstract

Purpose: This study explores the relationship between social trust and financial reporting obfuscation, defined as a lack of annual report readability. We propose that social trust is an important informal institution that promotes ethical behavior and accountability, leading corporate managers to p...

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Published in: Journal of Accounting Literature
ISSN: 0737-4607 2452-1469
Published: Emerald 2026
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URI: https://cronfa.swan.ac.uk/Record/cronfa71201
first_indexed 2026-01-07T14:59:45Z
last_indexed 2026-02-18T05:34:53Z
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spelling 2026-02-18T03:00:19.7626840 v2 71201 2026-01-07 Repaying the trust: social trust and the readability of form 10-K reports eefe2792c8eed5b49feede33981dfa53 0000-0002-5761-931X Tunyi Tunyi Abongeh Tunyi Tunyi Abongeh true false 2026-01-07 CBAE Purpose: This study explores the relationship between social trust and financial reporting obfuscation, defined as a lack of annual report readability. We propose that social trust is an important informal institution that promotes ethical behavior and accountability, leading corporate managers to produce clearer, more accessible annual reports for stakeholders. Design/Methodology/Approach: Using a sample of 44,799 firm-year observations from 1,076 publicly listed U.S. firms, we analyze the impact of regional social trust on the readability of financial reports. We further investigate how this relationship varies across different organizational and managerial characteristics, including stakeholder orientation, geographical dispersion, monitoring environments, managerial capabilities, and CEO experience. Findings: Our results provide strong evidence that firms located in regions with higher social trust produce less obfuscated financial reports. This negative relationship is more pronounced in firms with higher stakeholder orientation, lower geographical dispersion, stronger monitoring environments, more capable managers, and CEOs with broader work experience (generalist CEOs). Practical Implications: The findings suggest that social trust is a significant driver of financial report readability. This has important implications for external stakeholders, managers, and policymakers in understanding the role of informal institutions in corporate reporting practices. Originality/Value: This study contributes to the accounting literature by identifying social trust as a key factor influencing the clarity of financial reports and by providing insights into the underlying mechanisms through which this relationship operates. Journal Article Journal of Accounting Literature 1 36 Emerald 0737-4607 2452-1469 Social Trust, Financial Reporting, Obfuscation, Readability, Corporate Governance, CEO Experience, Stakeholder Orientation. 10 2 2026 2026-02-10 10.1108/jal-12-2024-0379 https://doi.org/10.1108/jal-12-2024-0379 In press COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University Another institution paid the OA fee 2026-02-18T03:00:19.7626840 2026-01-07T14:54:43.1480858 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Mussa Hussaini 0000-0001-5758-1190 1 Tanveer Hussain 0000-0003-4423-3087 2 Tunyi Tunyi Abongeh 0000-0002-5761-931X 3 Reon Matemane 0000-0003-0225-3928 4 71201__35909__803d1114791a4a2dbf3387e934aa78e5.pdf Social_trust_and_readability_TEX.pdf 2026-01-07T14:59:08.7799390 Output 762328 application/pdf Accepted Manuscript true Author accepted manuscript document released under the terms of a Creative Commons CC-BY licence using the Swansea University Research Publications Policy (rights retention). true eng https://creativecommons.org/licenses/by/4.0/
title Repaying the trust: social trust and the readability of form 10-K reports
spellingShingle Repaying the trust: social trust and the readability of form 10-K reports
Tunyi Tunyi Abongeh
title_short Repaying the trust: social trust and the readability of form 10-K reports
title_full Repaying the trust: social trust and the readability of form 10-K reports
title_fullStr Repaying the trust: social trust and the readability of form 10-K reports
title_full_unstemmed Repaying the trust: social trust and the readability of form 10-K reports
title_sort Repaying the trust: social trust and the readability of form 10-K reports
author_id_str_mv eefe2792c8eed5b49feede33981dfa53
author_id_fullname_str_mv eefe2792c8eed5b49feede33981dfa53_***_Tunyi Tunyi Abongeh
author Tunyi Tunyi Abongeh
author2 Mussa Hussaini
Tanveer Hussain
Tunyi Tunyi Abongeh
Reon Matemane
format Journal article
container_title Journal of Accounting Literature
container_start_page 1
publishDate 2026
institution Swansea University
issn 0737-4607
2452-1469
doi_str_mv 10.1108/jal-12-2024-0379
publisher Emerald
college_str Faculty of Humanities and Social Sciences
hierarchytype
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
url https://doi.org/10.1108/jal-12-2024-0379
document_store_str 1
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description Purpose: This study explores the relationship between social trust and financial reporting obfuscation, defined as a lack of annual report readability. We propose that social trust is an important informal institution that promotes ethical behavior and accountability, leading corporate managers to produce clearer, more accessible annual reports for stakeholders. Design/Methodology/Approach: Using a sample of 44,799 firm-year observations from 1,076 publicly listed U.S. firms, we analyze the impact of regional social trust on the readability of financial reports. We further investigate how this relationship varies across different organizational and managerial characteristics, including stakeholder orientation, geographical dispersion, monitoring environments, managerial capabilities, and CEO experience. Findings: Our results provide strong evidence that firms located in regions with higher social trust produce less obfuscated financial reports. This negative relationship is more pronounced in firms with higher stakeholder orientation, lower geographical dispersion, stronger monitoring environments, more capable managers, and CEOs with broader work experience (generalist CEOs). Practical Implications: The findings suggest that social trust is a significant driver of financial report readability. This has important implications for external stakeholders, managers, and policymakers in understanding the role of informal institutions in corporate reporting practices. Originality/Value: This study contributes to the accounting literature by identifying social trust as a key factor influencing the clarity of financial reports and by providing insights into the underlying mechanisms through which this relationship operates.
published_date 2026-02-10T05:25:18Z
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score 11.096892

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