Does annual report readability influence the design of SEOs?

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

TitleDoes annual report readability influence the design of SEOs?
TypeJournal article
AuthorsPuwanenthiren, 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.

KeywordsReadability
SEOs
Accelerating offerings
Rights offerings
JournalInternational Review of Economics and Finance
Journal citation93 (Part A), pp. 970-984
ISSN1873-8036
1059-0560
Year2024
PublisherElsevier
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 online28 Mar 2024
Published in printJun 2024

Related outputs

Does Options Trading Affect Audit Pricing?
Muhammad Jahangir Ali, Balasingham Balachandran, Huu Nhan Duong, Premkanth Puwanenthiren and Michael Theobald 2024. Does Options Trading Affect Audit Pricing? Journal of Business Finance & Accounting. Advanced online publication. https://doi.org/10.1111/jbfa.12821

Board Sub-Committee Effectiveness, Director Attraction and Director Attrition: Do nomination and remuneration committees’ matter?
Sutharson Kanapathippillai, Premkanth Puwanenthiren, Dessalegn Mihret and Man Dang 2024. Board Sub-Committee Effectiveness, Director Attraction and Director Attrition: Do nomination and remuneration committees’ matter? Pacific-Basin Finance Journal. 86 102441. https://doi.org/10.1016/j.pacfin.2024.102441

Unveiling the Impact of Foreign Competition on the Bond Market: Insights from S&P Debt Ratings
Lasantha, R., Tawiah, V., Atif, M., Puwanenthiren, P. and Nadarajah, S. 2024. Unveiling the Impact of Foreign Competition on the Bond Market: Insights from S&P Debt Ratings. Economics Letters. 241 111797. https://doi.org/10.1016/j.econlet.2024.111797

Does corporate culture shape “Tone at the Top”? Evidence from earnings calls
Man Dang, Prem Puwanenthiren, Edward Jones, Nguyen Bui and Thuy Dung Le 2024. Does corporate culture shape “Tone at the Top”? Evidence from earnings calls. Finance Research Letters. 59 104698. https://doi.org/10.1016/j.frl.2023.104698

Going Global: Evidence from India
Sivaprasad, S., Adami, R., Mathew, S. and Puwanenthiren, P. 2023. Going Global: Evidence from India. International Journal of Banking, Accounting and Finance. 13 (4), pp. 464-486. https://doi.org/10.1504/IJBAAF.2023.10055872

Audit Quality and Seasoned Equity Offerings Methods  
Dang, M., Puwanenthiren, P., Truong, C., Henry, D. and Vo, X.V. 2022. Audit Quality and Seasoned Equity Offerings Methods  . International Review of Financial Analysis. 83 102227. https://doi.org/10.1016/j.irfa.2022.102227

Strategic archetypes, credit ratings, and cost of debt  
Dang, M., Puwanenthiren, P., Jones, E., Nguyen, T.Q., Vo, X.V. and Nadarajah, S. 2022. Strategic archetypes, credit ratings, and cost of debt  . Economic Modelling. 114 105917. https://doi.org/10.1016/j.econmod.2022.105917

Does managerial tone matter for stock liquidity? Evidence from textual disclosures  
Dang, M., Puwanenthiren, P., Henry, D., Mieszko, M. and Toan, N.M. 2022. Does managerial tone matter for stock liquidity? Evidence from textual disclosures  . Finance Research Letters. 48 102917. https://doi.org/10.1016/j.frl.2022.102917

Country uncertainty, power distance, and payment methods in acquisitions
Dang, M., Hoang, Viet Anh, Jones, Edward, Henry, Darren, Le, Phuong Uyen and Puwanenthiren, Premkanth 2022. Country uncertainty, power distance, and payment methods in acquisitions. The European Journal of Finance. 28 (16), pp. 1541-1570. https://doi.org/10.1080/1351847x.2021.1971731

Do family firms pay less for external funding?
Ali, M., Miglani, S., Dang, M., Puwanenthiren, P. and Mieszko, M. 2022. Do family firms pay less for external funding? Australian Journal of Management. 47 (2), pp. 225-250. https://doi.org/10.1177/03128962211018241

Policy uncertainty and seasoned equity offerings methods
Dang, M., Puwanenthiren, P., Thai, H., Mazur, M., Jones, E. and Xuan Vinh, V. 2021. Policy uncertainty and seasoned equity offerings methods. International Review of Financial Analysis. 77 101830. https://doi.org/10.1016/j.irfa.2021.101830

Global Policy Uncertainty and Cross-Border Acquisitions
Dang, M., Nguy, N.V., Mazuren, M., Puwanenthiren, P. and Nguyen, N.T. 2021. Global Policy Uncertainty and Cross-Border Acquisitions. The Quarterly Review of Economics and Finance. 80, pp. 224-235. https://doi.org/10.1016/j.qref.2021.01.020

The impact of audit quality in rights offerings
Balachandran, B., Faff, R., Nguyen, L.H.G. and Puwanenthiren, P. 2020. The impact of audit quality in rights offerings. Accounting & Finance. 60 (3), pp. 2007-2037. https://doi.org/10.1111/acfi.12429

Does Managerial ability matter for the choice of Seasoned Equity offerings?
Puwanenthiren, P., Dang, M., Henry, D., Puwanenthiren, P. and Al Mamun, M. 2019. Does Managerial ability matter for the choice of Seasoned Equity offerings? North American Journal of Economics and Finance. 47, pp. 442-460. https://doi.org/10.1016/j.najef.2018.06.002

Permalink - https://westminsterresearch.westminster.ac.uk/item/w9wz2/does-annual-report-readability-influence-the-design-of-seos


Share this

Usage statistics

30 total views
21 total downloads
These values cover views and downloads from WestminsterResearch and are for the period from September 2nd 2018, when this repository was created.