A Study On The Impact Of The Readability Of Listed Companies' Annual Reports On The Synchronization Of Stock Returns

The company trait information has an important influence on the synchronicity of stock returns,which in turn affects the effectiveness of the whole stock market.Since the second world war,the stock market has developed vigorously,and how to reduce the synchronicity of stock returns has gradually become the focus of research by scholars in the financial field.In recent years,more and more studies have found that compared with market level information,company trait information can have a profound impact on the synchronicity of stock returns.In China,with the continuous development and standardization of the financial market,annual report,as a form of information disclosed by the company,has increasingly become a source of information that investors rely on,and the information about the company trait contained in the annual report has an increasing influence on investors' decision-making.Therefore,this paper attempts to explore one of the quality dimensions of the annual report-the readability of the annual report,the impact on the synchronicity of the stock returns of listed companies and its influencing mechanism.In this paper,2,223 annual reports of Shenzhen A-share companies regularly disclosed in 2017 and the data of 2018 stock returns synchronicity were selected.Fog index was used as the measurement index of annual report readability to explore the influence of annual report readability on stock returns synchronicity.On this basis,it further explores the regulating effect of internal and external characteristics of a company,which have an important influence on the information about the company trait in the market,on the relationship between the readability of annual reports and the synchronicity of stock returns,so as to further explore the conditions under which the readability of annual reports influences the synchronicity of stock returns.Among them,the internal and external characteristics of the company are divided into three dimensions: ownership concentration,company growth and the attributes of the audit institution.In this paper,a multiple linear regression model is established to verify the hypothesis.The empirical process relies on programming software Python,office software Excel and professional statistical analysis software SPSS.The results show that improving the readability of the annual report can significantly reduce the synchronicity of the company's stock returns.In addition,the relationship between the two is significantly influenced by the ownership concentration degree,the growth of the company and the attributes of the audit institution.When the ownership concentration of a company is high,the FOG index to measure the readability of annual report will have a positive effect on the synchronicity of stock returns.When the company's growth is high,the positive correlation between FOG index,which measures the readability of annual report,and the synchronicity of stock returns decreases.The positive effect of FOG on the synchronicity of stock returns is also weakened when the company employs one of the world's top ten auditors.The significance of this study lies in that,at the theoretical level,it has enriched the relevant research on the factors affecting the synchronicity of stock returns and explored the influence of annual report readability,an important information source for investors,on the synchronicity of stock returns.In practice,it provides important experience support for strengthening the information disclosure standard in China's capital market and improving the information efficiency and effectiveness of the securities market.The innovation points of this paper are as follows: first,the readability of Chinese annual report is measured in a targeted way,the readability measurement basis is adjusted appropriately,and the outline of vocabulary level of Chinese proficiency is taken as an important basis for vocabulary difficulty classification.Second,it innovatively explores the influence of annual report,an important information source for investors,on the synchronicity of stock returns.Thirdly,the annual report of domestic listed companies is innovatively selected to explore its influence on the synchronicity of stock returns.