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Abstract

Prior literature finds information content in the text of 10-K filings. Using a large hand collected
dataset, we provide the novel evidence on the additional information embedded in the designs
and graphs of financial reports. We find that firms with lower accruals, larger size, and higher
Fog index tend to add graphic information to the standard financial reports in addition to SEC
standard 10-Ks. Interestingly, we find that firms who added graphic financial reports experienced
a positive 2.7% abnormal returns after the graphic financial reports is released for 3 to 6 months.
The finding remains robust after controlling for financial market constraints, investor
sophistication, and information asymmetry. Further tests suggest that the new graphic
information is additional soft information that the companies try to deliver, rather than
“hardening” the existing numbers in the 10-Ks. This result suggests that corporate insiders try to
employ better designed financial reports to deliver important soft information about their
fundamentals, and it is still a challenge for the market to integrate the additional information in
the graphic financial reports to stock prices timely and accurately.

Item Type:	Report (Discussion Paper)
Authors/Creators:	Deng, X and Gao, L
Keywords:	graphic financial reports, reporting format change, soft information, anomaly
Publisher:	University of Tasmania
Copyright Information:	Copyright 2018 University of Tasmania
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