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Accounting narrative evaluation: using texture as a measure of quality

Version 2 2024-06-17, 03:56
Version 1 2014-10-27, 16:27
journal contribution
posted on 2024-06-17, 03:56 authored by J Iu, C Clowes
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.

History

Journal

New academy review

Volume

1

Season

Winter

Pagination

19-37

Location

Mancester, England

ISSN

1476-7201

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2002, Respect Publications

Issue

4

Publisher

Respect Publications

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