Study On The Influencing Factors Of Readability Of Annual Report Of Listed Companies On GEM

The financial report is a written document that reflects the financial status and results of the business.It is an important communication channel between the listed companies and investors in the capital market.Investors based on the information of the financial report to make investment decisions.The quality of the information is directly related to the efficiency of the capital market.Readability is the prerequisite for the quality of information,because only the information that is understood by the user is useful.So the readability of financial reporting deserves our attention and research.In the language information of the financial report,the Management Discussion and Analysis(MD&A)analyzes the operation and financial situation of the listed company from the management perspective,and analyzes the future and risk of the enterprise.It is the most extensive part of an annual report read by the investors,so the readability of this part should be taken seriously.This paper chooses the MD&A part of annual report of listed companies on the GEM of the years of 2015 as the research samples,and uses average sentence length and accounting term density as the two indexes to measure the readability.On the basis of existing literature research,the model of the influencing factors of MD&A readability of the listed companies was established.This model is established to analzye the relationship between the readability of MD&A,the performance of the company,the growth of the company and the size of the company.By accompanying with relative data analysis,we got the results of empirical research.The results of empirical research: the performance of company has a significant effect on the readability of the MD&A.But the growth of the company and the size of company don’t have a significant effect on the readability of the MD&A.The reason is the GEM listed companies own particularity.Most of the GEM companies are innovative enterprises or high growth enterprises.And most of these companies have strong growth ability.But the size of the GEM companies is not large.On the one hand,in order to conform to the company’s innovation and high growth,the language information of the company’s annual report need longer sentences and more technical terms.In this reason,the readability of the MD&A has nothing to do with the difference of the growth of the company.On the other hand,these companies using more funds and energy for the development of technology and business to enhance their competitiveness.In this reason,the readability of the MD&A has nothing to do with the difference of the size of company.So the growth of the company and the size of company don’t have a significant effect on the readability of the MD&A.Finally,based on the results of empirical research,this paper summarizes the specific suggestions for optimizing the writing style.And puts forward the countermeasures to improve the readability of MD&A from the angle of optimizing writing method of the MD&A,perfecting the internal governance structure of listed companies and strengthening government regulation,and puts forward the prospect of the future research.