Master's – Study on explanatory notes

Tipo de evento: 
Data e hora: 
14/08/2019 - 09:00 to 12:00


Raquel Sales Costa         

Master's – Study on explanatory notes 

Advisor:  Prof. Dr. Luiz Nelson Guedes de Carvalho

Comission: Profs. Drs. Fernando Dal-Ri Murcia, Isabel Cristina Sartorelli and Eric Aversari Martins

 Class: 217, FEA-5


 This paper investigates the effects of OCPC07 on the readability and length of explanatory notes issued by publicly traded companies. As a complementary objective, we sought to understand which set of characteristics of the companies determine the degree of legibility and the length of its explanatory notes. A sample of 163 publicly traded companies with data for the years 2013, 2014, 2015, 2016 and 2017 was collected. As a proxy for measuring the complexity of the texts were used the Flesch Index and the natural logarithm number of words in the texts of explanatory notes. To test the effects of OCPC07 on Financial Instruments and Risk Management disclosures, a mean test was performed to verify if the difference between the means of the complexity proxies is significant in the pre- and post-disclosure periods of the guidance. To find the determinants of readability and length of the explanatory notes, an exploratory technique (Correspondence Analysis) and a confirmatory technique (Panel Data) were used to measure the relationship between complexity proxies and possible determinants. The results show that the readability of the explanatory notes did not change from 2013 to 2017. The difference in means of the Flesch Index was not significant. On the other hand, the size of the explanatory notes decreased during the studied period, so that the mean difference in the number of words was significant. The association test showed that companies with better performance are associated with more legible but longer explanatory notes. The panel data technique showed a statistically significant and positive relationship between the company's sector of activity and readability of the explanatory notes. The size of the company, the fact that large firms audited them, whether or not they issued ADR and the performance in the period also showed a statistically significant and positive relationship with the size of the explanatory notes disclosed. This work contributes to the national literature by demonstrating that efforts by regulatory agencies and market agents seeking better quality in accounting and financial disclosures are having some effect in the preparation of explanatory notes.

*Abstract provided by the author



Voltar para a página de eventos