Puwanenthiren, P., Md Saiful Azam, Muhammad Jahangir Ali and Sivathaasan Nadarajah 2024. Does annual report readability influence the design of SEOs? International Review of Economics and Finance. 93 (Part A), pp. 970-984. https://doi.org/10.1016/j.iref.2024.03.062
| Title | Does annual report readability influence the design of SEOs? |
|---|---|
| Type | Journal article |
| Authors | Puwanenthiren, P., Md Saiful Azam, Muhammad Jahangir Ali and Sivathaasan Nadarajah |
| Abstract | Motivated by the rapid growth in non-quantitative corporate disclosure and seasoned equity offerings (SEOs) in the U.S., we take a fresh look at the decision-making process behind accelerated offerings in SEOs, with a specific emphasis on the readability of annual reports within 10-K filings. In particular, our study explores whether readability of annual reports affects the choice of SEOs methods. Using a hand-collected sample of 3143 instances of seasoned equity issues between 2002 and 2021, we show a significantly positive relation between readability scores and accelerated offerings. These results hold across various robustness tests. We further reveal a negative relationship between abnormal operating performance and long-term stock performance following the announcements of SEOs, demonstrating that: firstly, SEOs provide valuable insights into future earnings; and secondly, these insights have a lasting impact on stock performance. Overall, our evidence strongly highlights the substantial influence of annual report readability on the design of SEOs, emphasizing the critical importance of conveying financial information concisely and effectively to the market. |
| Keywords | Readability |
| SEOs | |
| Accelerating offerings | |
| Rights offerings | |
| Journal | International Review of Economics and Finance |
| Journal citation | 93 (Part A), pp. 970-984 |
| ISSN | 1873-8036 |
| 1059-0560 | |
| Year | 2024 |
| Publisher | Elsevier |
| Publisher's version | License CC BY-NC 4.0 File Access Level Open (open metadata and files) |
| Digital Object Identifier (DOI) | https://doi.org/10.1016/j.iref.2024.03.062 |
| Publication dates | |
| Published online | 28 Mar 2024 |
| Published in print | Jun 2024 |