Annual Report Text Information and Credit Rating Based on the Perspective of Readability
Year: 2024
Type: article
Abstract: The current credit rating system gives much attention to the quantitative situation of the company's finances, whereas the soft information hidden in the company's annual reports is often ignored. This study reviews the annual reports of A-share listed companies in China from 2007 to 2021 and explores the relationship between the readability of the annual reports and the credit ratings given by rating agencies. We find that the readability of annual reports significantly impacts the company's credit rating. Further heterogeneity testing reveals that this impact significantly varies across different types of companies. Therefore, credit rating agencies should pay due attention to the soft information in the annual report when rating a company to ensure accuracy in their ratings.
Authors: Yu Gong, Muhan Shi, Dongli Han
Institution: Central University of Finance and Economics
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,995
OpenAlex ID: W4405933825