Aug 2026· Accounting & Finance· 0 citations· 56 references
Abstract
This study examines whether firms strategically adjust the readability of Item 1A (“Risk Factors”) disclosures following data breaches. Using U.S. firm‐year observations from 2006 to 2023, we find that data breaches are associated with a significant decline in Item 1A readability. This decline is not accompanied by a meaningful increase in informational content; instead, post‐breach disclosures exhibit higher syntactic complexity, more positive tone, and lower textual similarity to prior and industry peers' filings, consistent with strategic obfuscation rather than transparent reporting. The readability decline is amplified among firms facing higher litigation risk but attenuated among firms with stronger reputations for technological innovation. Notably, less readable disclosures soften negative market reactions, suggesting that obfuscation works as investors are challenged to fully process risk related information buried in complex language. These findings demonstrate that firms use narrative complexity for impression management following adverse events, with real capital market consequences.
This study aims to examine the impact of data breach incidents on the tone of corporate disclosures among US publicly listed firms. As digital infrastructure becomes increasingly vital for businesses, cybersecurity breaches present significant risks not only financially but also in shaping corporate narratives....
Fadhila Hamza, T. Arifin, Afsheen Abrar et al.· International Journal of Acc...· 0 citations
Using a sample of Chinese listed firms from 2009 to 2024, we examine whether voluntary disclosure of personal data protection systems (PDPS) is associated with earnings management. We document a moral licensing effect; that is, firms with higher PDPS disclosure engage in more real earnings management (REM). Specificall...
Wan-Yi Chen, Hao Ren· Abacus. A Journal of Account...· 0 citations
Prior research finds that the textual content of Item 1A risk factor disclosures in 10‐K filings provides valuable information about firm risk. However, less is known about whether the ordering of these disclosures conveys useful information. We examine whether the relative prominence of individual risk factors withi...
Michael V. Chin, Yue Liu, Kevin C. Moffitt· Contemporary Accounting Rese...· 0 citations
This study is among the first to jointly integrate dictionary-based, topic-model, syntactic and semantic embedding approaches to analyze the relationship between risk disclosure and report readability and demonstrates that AI-based linguistic measures add substantial explanatory power beyond traditional readability and...
Zabihollah Rezaee, Javad Rajabalizadeh· Journal of Financial Reporti...· 0 citations
Investors interpret social disclosures from a risk perspective, yet relevant information can reach them through channels that differ sharply in regulatory enforcement and materiality: SEC filings, sustainability reports, or financial reports. We analyse how social disclosure via each channel relates to idiosyncratic ri...
A. Hoepner, Blerita Korca, Frank Schiemann et al.· 0 citations
A key question at the interface of sustainable finance and market efficiency is whether capital markets discipline firms not only for what they do—emissions, violations, or green investment—but also for how they communicate their environmental positions. Disclosure research suggests that the quality and verifiability o...
