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Lookup NU author(s): Dr Ekaete Efretuei
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Purpose: Prior IFRS adoption effects has focused on accounting quantitative information but there is scant evidence of the impact on textual attributes. Motivated by the increasing complexity of annual report narratives, this study examines the impact of IFRS adoption on the level of complexity of accounting narratives. It investigates whether IFRS mandatory adoption in 2005 is associated with the pervasiveness of narrative complexity in wider corporate reporting using annual report narratives.Design/methodology/approach: Narrative complexity is measured using, increased disclosures, syllabification at the word level and fog index from computational linguistics. Statistical regression fixed effects model including accounting narrative research control variables is used to analyse the relationship between the observed level of annual report narrative complexity and mandatory adoption excluding the adoption year effects.Findings: The results find evidence of a significant increase in the complexity of narratives reported in annual reports with the mandatory regulatory adoption of IFRS in 2005 and this increase appears to be associated with increased narrative disclosures (longer narratives), increased use of complex words and overall textual complexity.Originality/value: The findings are an indication that IFRS contributes to the observed increased disclosure complexity widely reported in the accounting literature supporting calls for a narrative disclosure standard to be included within the scope of IFRS.
Author(s): Efretuei E
Publication type: Online Publication
Publication status: Published
Series Title:
Year: 2019
Acceptance date: 14/06/2019
Publisher: Elsevier
Place Published: New York
URL: http://dx.doi.org/10.2139/ssrn.3469639
DOI: 10.2139/ssrn.3469639
