Pen is Mightier than the Word: Does Annual Report Writing Matter to Investors and Managers? Evidence from Exogenous Shock

Agarwal, N (2018) Pen is Mightier than the Word: Does Annual Report Writing Matter to Investors and Managers? Evidence from Exogenous Shock. Dissertation thesis, Indian School of Business.

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Abstract

This dissertation examines the causal relation between writing style of annual reports and related capital market outcomes and managerial decision quality. Using a sample of South African firms that adopted Integrated Reporting (IR) under the mandate issued in 2010, I demonstrate that adoption of IR leads to an increase in absolute three-day CAR surrounding the filing, and a reduction in stock price delay. Using a manually coded measure of connectivity of information, I show that IR makes it easier for investors to process the information contained in annual reports by integrating various pieces of information through the principle of connectivity. I also document an improvement in managerial decision quality post the adoption of IR. I contribute to the literature by providing a direct causal evidence of influence of report writing style on investor response to these disclosures. Additionally, I document real effects of disclosure regulations on managerial decision making despite an absence of change in underlying accounting fundamentals.

Item Type: Thesis (Dissertation)
Subjects: Business and Management
Date Deposited: 09 Feb 2023 15:03
Last Modified: 20 May 2023 20:09
URI: https://eprints.exchange.isb.edu/id/eprint/1668

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