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Annual report readability and firms’ investment decisions

Author

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  • Nam Huong Dau
  • Duy Van Nguyen
  • Hai Thi Thanh Diem

Abstract

An easy-to-read report may carry positive information for decision making and conversely. In that spirit, this paper investigates the relationship between the readability of companies’ annual reports, defined as the easiness to read, understand, and extract information from the reports, and investment decisions of Singapore companies. Empirical results with an DGMM analysis on 251 domestic companies listed on the Singapore Stock Exchange (SGX) show a positive relationship between the readability of annual reports this year and investments next year. As such, reports’ readability can serve as a signal significant to predict companies’ future investments. Our findings are consistent with signaling theory and contribute significantly to the literature for empirical investigations on the relationship of annual reports’ readability and firms’ investment decisions.

Suggested Citation

  • Nam Huong Dau & Duy Van Nguyen & Hai Thi Thanh Diem, 2024. "Annual report readability and firms’ investment decisions," Cogent Economics & Finance, Taylor & Francis Journals, vol. 12(1), pages 2296230-229, December.
    • Handle: RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2296230
    DOI: 10.1080/23322039.2023.2296230
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