The Impact of Firm Performance on MD&A Readability Choice in an Experimental Setting

• In Event: Session D: Accounting & Markets

Abstract

This study examines the association between earnings and MD&A readability. Drawing from Bloomfield (2002, 2008) and Li (2008) I re-examine the association between firm performance and readability in an experimental setting. Similar to Li’s (2008) hypothesized association, I predict that managers will tend to prefer less readable MD&As when their firm misses the earnings target for the period. Ninety-five master’s level business students participated in this study. Findings suggest areas for future research.

Keywords: MD&A, readability, FOG index

Author

• Suzanne Marie Perry, University of North Texas