Evaluating a measure of content quality for accounting narratives (with an empirical application to narratives from Australia, Hong Kong, and the United States)

\n\t\t\t\t\tThis paper evaluates a texture-based approach developed by Sydserff and Weetman (1999), to examine corporate annual report narratives. This is achieved by using the texture index to evaluate information content (which includes readability) in accounting narratives. Specifically, we examine the letter to shareholders of reports from Australia, Hong Kong and the United States. We suggest a texture-based evaluation provides a robust measure of narrative quality due to the incorporation of readability and content analysis. The ability to measure content quality assists in promoting accountability, with the aim of improving usefulness of corporate information and disclosures, and greater investor confidence in capital markets. This paper also investigates these exploratory results to consider variations in quality between different countries. Considerable differences were found between the countries with Hong Kong reports generally superior. These tentative findings provide a small contribution to the comparative annual report literature and the emerging area of narrative evaluation. \n\t\t\t\t