American Journal of Business and Society
Articles Information
American Journal of Business and Society, Vol.4, No.2, Jun. 2019, Pub. Date: Jun. 25, 2019
Readability of Annual Reports and the Agency Problem of Corporation in the Context of Pakistan
Pages: 72-79 Views: 252 Downloads: 100
Authors
[01] Muneeb Ahmad, College of Business Administration, Liaoning Technical University, Huludao, China.
[02] Zhou Maochun, College of Business Administration, Liaoning Technical University, Huludao, China.
Abstract
This study is conducted to investigate the issue of readability of the annual report, which caused the conflict between the shareholders and the management. Annual reports are the integral source of information for the shareholders regarding their investment. The most important thing here is the readability of the financial statements. Moreover, as the decisions of investors based on the financial information stated in the financial statements so the reliability of the financial is another important aspect. To explore this important aspect, this study is an effort to facilitate the investors to do their investment decisions, especially in developing countries like Pakistan. It is a fact that the Pakistani majority of the investors are not from the financial background and to understand and readability of the financial statements is all the time issue for them. To investigate the importance of the readability, we took the data of 21 non-financial companies which are in the KSE-30 index of Pakistan for the 10 years (2008-2017). The findings of our results depict that those firms whose annual report is more readable as compare to other facing low problem of the conflict between the shareholders and the management. Further results of this study indicate that under the better quality measures, relevant audit increases the readability of the annual report, which reduces the agency cost.
Keywords
Financial Reports, Shareholders, Integral Source and Pakistan
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