Research Readability Factors Listed Companies "Management Discussion And Analysis (MD & A)"

The financial report is a bridge of communication between public companies and investors in the capital markets, the quality of financial report is directly related to the efficiency of capital market. The quality requirements of accounting information, including reliability, relevance, readability, comparability, importance and caution. Readability is the most important prerequisite for the quality of financial reporting information, because only the information which can be understanded by the users is useful. In recent years, the length of text of financial reporting information is getting longer and longer, the readability of the language information is also get more and more attention by scholars from various countries. In the language information of financial report, Management discussion and analysis(ie, the MD&A)which is based on the management’s perspective, includes both operational and financial situation of companies in operating period, also includes a vision for the future and estimates of risk. MD&A is mostly read by extensive investors.To study this,201public companies were chosen from Shanghai stock exchange market. Chapter length, average sentence length, the quantity of accounting profession vocabulary was choosed to measure the readability of MD&A, the study on the basis of the existing literature, then a model of factors which affect the MD&A’s redability was built, exploring the the relationship between MD&A’ redability and the performance of the company, corporate governance, company size, growth, capital structure and equity characteristics.Empirical studies have shown:the better the performance of the company, the bigger the scale, the higher the growth, the higher of the MD&A’s readability. The larger of the board of Supervisors,the higher of MD&A’s readability. When the chairman of the board and the CEO was’nt taken by one person, the MD&A is more readable. The apital structure and the readability of MD&A is independent.Finally, based on the results of empirical research, we put forward some specific proposals and suggestions for improiving the redability of MD&A.