Financial Opacity and Firm Performance: The Readability of REIT Annual Reports
We examine the capital market pricing implications of firm disclosure opacity as measured by the linguistic readability of REIT annual reports. The SEC has expressed concern that firms selectively manage the transparency of disclosures in order to hide adverse information. After controlling for othe...
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| Veröffentlicht in: | The journal of real estate finance and economics 2012-08, Vol.45 (2), p.450-470 |
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| container_title | The journal of real estate finance and economics |
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| creator | Dempsey, Stephen J. Harrison, David M. Luchtenberg, Kimberly F. Seiler, Michael J. |
| description | We examine the capital market pricing implications of firm disclosure opacity as measured by the linguistic readability of REIT annual reports. The SEC has expressed concern that firms selectively manage the transparency of disclosures in order to hide adverse information. After controlling for other non-experimental factors that influence the readability of REIT financial statements, we find (1) financial opacity is negatively related to reported firm performance, and (2) the residual opacity that remains after controlling for other determinants of annual report readability has incremental explanatory power for returns beyond the Fama and French (1992, 1993) risk factors. The opacity risk-return premium persists after controlling for a (heretofore undocumented) stark monotonic decrease in annual report readability following the Sarbanes-Oxley Act of 2002. |
| doi_str_mv | 10.1007/s11146-010-9263-2 |
| format | Article |
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The SEC has expressed concern that firms selectively manage the transparency of disclosures in order to hide adverse information. After controlling for other non-experimental factors that influence the readability of REIT financial statements, we find (1) financial opacity is negatively related to reported firm performance, and (2) the residual opacity that remains after controlling for other determinants of annual report readability has incremental explanatory power for returns beyond the Fama and French (1992, 1993) risk factors. 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The opacity risk-return premium persists after controlling for a (heretofore undocumented) stark monotonic decrease in annual report readability following the Sarbanes-Oxley Act of 2002.</description><subject>Access to information</subject><subject>Annual reports</subject><subject>Capital costs</subject><subject>Capital market</subject><subject>Capital markets</subject><subject>Cost of capital</subject><subject>Costs</subject><subject>Economics</subject><subject>Economics and Finance</subject><subject>Efficient markets</subject><subject>Financial disclosure</subject><subject>Financial Services</subject><subject>Hypotheses</subject><subject>Investments</subject><subject>Investors</subject><subject>Organizational effectiveness</subject><subject>Prices</subject><subject>Readability</subject><subject>Real estate investment trust (REIT)</subject><subject>Regional/Spatial Science</subject><subject>REITs</subject><subject>Return on assets</subject><subject>Risk</subject><subject>Studies</subject><issn>0895-5638</issn><issn>1573-045X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2012</creationdate><recordtype>article</recordtype><sourceid>BENPR</sourceid><recordid>eNp1kEtLAzEUhYMoWKs_wF3AjZvozWsycVeK1UKxUiq4GzKZjE6Zl0ln0X9vyrgQwdVd3O87HA5C1xTuKIC6D5RSkRCgQDRLOGEnaEKl4gSEfD9FE0i1JDLh6Tm6CGEHAIlKYYJeFlVrWluZGq97Y6v9AZu2wIvKN_jV-bLzTXy7B7z9dHjjTGHyqj5SXYk3j8stnrXtEOWN6zu_D5forDR1cFc_d4reFo_b-TNZrZ-W89mKWKH0nsgizwteaiELZiFWVLnJSyZU6biwSqTaGnCyKHiRa6udpSI1KQMrbOIkd3yKbsfc3ndfgwv7rKmCdXVtWtcNIaPAOUsl1xDRmz_orht8G9tFinGtEqBJpOhIWd-F4F2Z9b5qjD9EKDsunI0LZ3Hh7LhwxqLDRidEtv1w_nfyf9I3qG58_w</recordid><startdate>20120801</startdate><enddate>20120801</enddate><creator>Dempsey, Stephen J.</creator><creator>Harrison, David M.</creator><creator>Luchtenberg, Kimberly F.</creator><creator>Seiler, Michael J.</creator><general>Springer US</general><general>Springer Nature B.V</general><scope>AAYXX</scope><scope>CITATION</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>885</scope><scope>8AO</scope><scope>8BJ</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>ANIOZ</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FQK</scope><scope>FRAZJ</scope><scope>FRNLG</scope><scope>F~G</scope><scope>JBE</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>M0C</scope><scope>M1F</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope></search><sort><creationdate>20120801</creationdate><title>Financial Opacity and Firm Performance: The Readability of REIT Annual Reports</title><author>Dempsey, Stephen J. ; 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| subjects | Access to information Annual reports Capital costs Capital market Capital markets Cost of capital Costs Economics Economics and Finance Efficient markets Financial disclosure Financial Services Hypotheses Investments Investors Organizational effectiveness Prices Readability Real estate investment trust (REIT) Regional/Spatial Science REITs Return on assets Risk Studies |
| title | Financial Opacity and Firm Performance: The Readability of REIT Annual Reports |
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