Does readability of textual disclosures in modern slavery reports pay off? Evidence from a regulatory setting

Authors

Amitav Saha, The University of Notre Dame AustraliaFollow
Sudipta Bose
Habib Zaman Khan

Publication Details

Saha, A., Bose, S., & Khan, H. (2024). Does readability of textual disclosures in modern slavery reports pay off? Evidence from a regulatory setting. Accounting in Europe, Early View (Online First).

Abstract

This study examines the association between textual disclosure readability in modern slavery reports and firm value. Using 212 Australian modern slavery statements for the financial year 2019–2020, a positive association is found between more readable textual disclosures in modern slavery reports and firm value. The study also finds that an optimistic tone in textual disclosures and better firm-level corporate governance accentuate this impact. Further analysis shows that the informative information component of textual disclosures in modern slavery reports is positively priced by investors. Our study’s findings contribute to the debate on why firms should consider improving the textual disclosure readability of modern slavery reports. The study also informs various regulators (e.g. Australian Border Force, Australian Securities and Investments Commission [ASIC], European Union [EU] and United Kingdom[UK] government agencies, etc.) and international organisations about firm-level efforts to promote high-quality reporting on the modern slavery risk.

Keywords

modern slavery disclosure, impression management, obfuscation, firm value, Australia

Link to Publisher Version (URL)

10.1080/17449480.2024.2364654