Determinants of the Readability of Board of Directors’ Report: An Applied Study on Firms Listed on the Egyptian Stock Exchange

نوع المستند : المقالة الأصلية

المؤلفون

1 Associate Professor of Accounting at Eslsca University in Egypt Alexandria University

2 Master of Science in Accounting at Arab Academy for Science, Technology, and Maritime

المستخلص

This study aims to examine the readability level of board of directors' reports for firms listed on the Egyptian stock exchange. Further, it also aims to investigate the effect of profitability, corporate risk, earnings management and firm size on the readability of the board of directors' reports. While controlling for firm age, audit quality, financial loss, board size, board independence, and CEO duality. The readability of board of directors' reports refers to the ability of stakeholders to comprehend firms' valuation-relevant information because of writing style. The study used the Lasbarhets index (LIX) to measure the readability of the board of directors' reports. The research sample consists of 33 non-financial firms listed in the Egyptian stock exchange from the period 2015 to 2022, resulting in a final sample of 264 firm-year observations. The study provided evidence that the readability of the board of directors' report ranges from difficult to very difficult to read. Profitability and firm size have a positive relationship with the readability of the board of directors' reports; earnings management has a negative relationship with the readability of the board of directors' reports. On the other hand, the study failed to provide any evidence for the existence of a relationship between corporate risk and the readability of the board of directors' reports.

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