The impact of complex business strategy on annual report readability

S. R. Hernanda, M. Nasih

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This paper aims to investigate the relationship between business strategy and readability in Indonesia. This study uses a sample of 681 firm-year observations from the firms listed in the Indonesia Stock Exchange (IDX) between 2006 and 2017 for the 2010-2017 business strategy score. Data are processed using ordinary least square regression to establish the analysis result. This study finds that business strategy has a positive and significant relationship with annual report readability. These findings suggest that firms with more complex strategy produce less readable annual report while firms following less complex strategy generate better annual report readability. Business strategy influences a firm's operating complexity and environmental uncertainty, resulting in the variance of disclosures readability and complexity. This study results in the policymakers, investors, auditors and other stakeholders to consider a firm's business strategy in comprehending the annual report regarding decision-making.

Original languageEnglish
Pages (from-to)169-185
Number of pages17
JournalPolish Journal of Management Studies
Volume22
Issue number1
DOIs
Publication statusPublished - 2020

Keywords

  • Business Strategy
  • Defender
  • Firm Performance
  • Prospector
  • Readability

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