Measuring Readability of Segment Reports of Indian Companies

Abstract

Investors and regulators have expressed concern about the increasingly complex financial reports that are difficult for novice investors to understand. In the same context, the present study examines the easiness of reading the segment reports of Indian listed companies. It employed Flesch reading ease and Flesch Kincaid grade level for measuring the readability statistics of such reports. It is found that the reading score is not in desirable range and have extreme difficulty in reading and understandability i.e. these reports can only be used and interpreted by professionals. As a result, it is urged that Indian companies need to improve the sentences, language, and vocabulary of the segment reports. More passive sentences are also proven to make reports less meaningful, making it more challenging to read and comprehend what the report is trying to say. Thus, to enhance the readability score of segment reports, qualitative characteristics need to be increased with less use of passive sentences.