Accounting narrative evaluation: using texture as a measure of quality

Iu, Justin and Clowes, Courtney 2002, Accounting narrative evaluation: using texture as a measure of quality, New academy review, vol. 1, no. 4, Winter, pp. 19-37.

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Title Accounting narrative evaluation: using texture as a measure of quality
Author(s) Iu, Justin
Clowes, Courtney
Journal name New academy review
Volume number 1
Issue number 4
Season Winter
Start page 19
End page 37
Publisher Respect Publications
Place of publication Mancester, England
Publication date 2002
ISSN 1476-7201
Summary This paper applies a texture-based approach to evaluating accounting narratives. We employ the texture index created by Sydserff and Weetman (1999) as it is purported to evaluate narratives more accurately than previous methods. Not enough emphasis has been placed on the utilisation of linguistic tools in the accounting context. We see that a rigorous test serves the accountability function and may contribute positively to investor protection and confidence. We support the contention that improving narrative evaluation will help increase the quality of accounting narratives as they are presented in corporate annual reports. Quality for purpose of this paper is defined as a function of readability and understandability. These characteristics are considered essential for informed investment decision-making. We focus on the usefulness of the texture index in determining an appropriate measure of both readability and understandability by applying the texture index to a sample of corporate annual reports. Our results show conditional support for the use of the texture index as a viable alternative to readability tests.
Language eng
Field of Research 150199 Accounting, Auditing and Accountability not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2002, Respect Publications
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Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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