Timely and Costly? Exploring the Role of Annual Report Readability in Investment Decision-Making
Keywords:
Audit Costs, Investment Decision, Readability, TimelinessAbstract
This study aims to examine the partial effects of timeliness, audit cost, and readability on investment decisions, as well as to test the ability of readability as a moderating variable in the research model. The research sample includes 17 companies listed on the LQ45 index, with data analysis using multiple linear regression. The research model was designed to examine the direct influence of timeliness, audit costs, and readability on investment decisions and to evaluate the role of readability as a quasi-moderator. The results showed that timeliness, audit costs, and readability had a negative influence on investment decisions. In addition, it was found that readability functioned as a moderating variable, so that the level of readability of annual reports could influence the relationship between timeliness and audit fees on investment decisions.
References
Aksoy, M., Yilmaz, M. K., Topcu, N., & Uysal, Ö. (2021). The impact of ownership structure, board attributes and XBRL mandate on timeliness of financial reporting: evidence from Turkey. Journal of Applied Accounting Research, 22(4). https://doi.org/10.1108/JAAR-07-2020-0127
Aldoseri, M. M. (2024). The Impact of Management Characteristics on the Relationship between Annual Reports Readability and Investment Decision Risks - An Empirical Study on Saudi Companies. Journal of Statistics Applications and Probability, 13(2), 623–639. https://doi.org/10.18576/jsap/130204
Alrashidi, R., Baboukardos, D., & Arun, T. (2021). Audit fees, non-audit fees and access to finance: Evidence from India. Journal of International Accounting, Auditing and Taxation, 43. https://doi.org/10.1016/j.intaccaudtax.2021.100397
Arora, J., & Chakraborty, M. (2021). Does the ease of reading of financial disclosures influence investment decision? Economics Letters, 204. https://doi.org/10.1016/j.econlet.2021.109883
Ayu, P. D., Ida, R., & Apit, S. W. (2019). The Influence of Company Size and Audit Fee on Audit Quality. 1st International Conference on Economics, Business, Entrepreneurship, and Finance. https://doi.org/10.2991/icebef-18.2019.83
Badruzaman, J., Fadilah, A. R., & Abdurrahman, F. (2022). Determining the Effect of Return on Equity (ROE) on Price Earnings Ratio (PER) and Price to Book Value (PBV) in LQ45 companies, Indonesia. WSEAS Transactions on Business and Economics, 19. https://doi.org/10.37394/23207.2022.19.141
Besuglov, E., & Crasselt, N. (2021). The effect of readability and language choice in management accounting reports on risk-taking: an experimental study. Journal of Business Economics, 91(1). https://doi.org/10.1007/s11573-020-00980-4
Blanco, B., Coram, P., Dhole, S., & Kent, P. (2021). How do auditors respond to low annual report readability? Journal of Accounting and Public Policy, 40(3). https://doi.org/10.1016/j.jaccpubpol.2020.106769
Chircop, J., Gagnon, J., & Young, S. (2024). Capital market response to high quality annual reporting: evidence from UK annual report awards. Accounting and Business Research, 54(2). https://doi.org/10.1080/00014788.2022.2106542
Darlington, E. I., Beauty E, J.-A., & Rachael E, A. (2025). Timeliness of Financial Reporting And Investment Decision Dynamics: Evidence From Quoted Deposit Money Banks in Nigeria. Gusau Journal of Accounting and Finance, 6(2), 154–165.
Dau, N. H., Nguyen, D. Van, & Diem, H. T. T. (2024). Annual report readability and firms’ investment decisions. Cogent Economics and Finance, 12(1). https://doi.org/10.1080/23322039.2023.2296230
Ebaid, I. E.-S. (2023). IFRS adoption and the readability of corporate annual reports: evidence from an emerging market. Future Business Journal, 9(1). https://doi.org/10.1186/s43093-023-00244-x
Elwisam, Muhani, Ria, Digdowiseiso, K., Kartini, Juliandi, D., & Saputra, D. (2024). Implementation of Signaling Theory in Financial Management: A Bibliometric Analysis. Revista de Gestao Social e Ambiental, 18(3). https://doi.org/10.24857/rgsa.v18n3-092
Gu, S., & Dodoo, R. N. A. (2020). The Impact of Firm Performance on Annual Report Readability: Evidence from Listed Firms in Ghana. Journal of Economics, Business, & Accountancy Ventura, 22(3). https://doi.org/10.14414/jebav.v22i3.2097
Harinurdin, E. (2023). The Influence of Financial Ratio and Company Reputation on Company Stock Prices Financial Sector. The 5th International Conference on Vocational Education Applied Science and Technology. https://doi.org/10.3390/proceedings2022083047
Hartaty, & Dianawati, W. (2024). The Association Between Audit Fee and Audit Quality: a Meta-Analysis Study. Jurnal Ekonomi Dan Bisnis Airlangga, 34(1), 77–98. https://doi.org/10.20473/jeba.v34i12024.77-98
Hendi, H., & Sitorus, R. (2023). An Empirical Research on Audit Report Timeliness. Jurnal Akuntansi Dan Keuangan, 25(1). https://doi.org/10.9744/jak.25.1.39-53
Horvat, T., Travner, U., Skoko, H., & Bobek, V. (2022). The Influence of Profit, Revenues and Debt on Audit Prices in Large Companies: Insights from Slovenia. Economic Research-Ekonomska Istrazivanja, 35(1), 778–798. https://doi.org/10.1080/1331677X.2021.1934057
Junita, E., & Devica Pratiwi. (2023). What Factors Influence the Determination of Audit Fees. Dinasti International Journal of Economics, Finance & Accounting, 4(1). https://doi.org/10.38035/dijefa.v4i1.1751
Le Maux, J., & Smaili, N. (2021). Annual report readability and corporate bankruptcy. Journal of Applied Business Research, 37(3). https://doi.org/10.19030/jabr.v37i3.10374
Li, X., Chen, X., Qi, B., & Tian, G. (2020). Employee quality and audit fee: evidence from China. Accounting and Finance, 60(5). https://doi.org/10.1111/acfi.12664
Luo, J. hui, Li, X., & Chen, H. (2018). Annual report readability and corporate agency costs. China Journal of Accounting Research, 11(3). https://doi.org/10.1016/j.cjar.2018.04.001
Nguyen, A. H., Nguyen, H. T., Tran, C. Q., & Le, L. Q. (2022). Determinants of Time for Publication Annual Reports: Empirical Evidence from Non-Financial Listed Companies in Vietnam. International Journal of Financial Studies, 10(2). https://doi.org/10.3390/ijfs10020043
Nurbaiti, A., Thoi’ah, N., Fahlevi, A. R., & Khairunnisa. (2024). Audit Fees Determinants: the Impact of Firm Complexity, Managerial Ownership, and Partner Rotation. Jurnal Akuntansi Trisakti, 11(2), 253–270. https://doi.org/10.25105/v11i2.21106
Osadchy, E. A., Akhmetshin, E. M., Amirova, E. F., Bochkareva, T. N., Gazizyanova, Y. Y., & Yumashev, A. V. (2018). Financial statements of a company as an information base for decision-making in a transforming economy. European Research Studies Journal, 21(2). https://doi.org/10.35808/ersj/1006
Ozer, G., Merter, A. K., & Balcioglu, Y. S. (2023). Financial Reporting Timeliness: A Scope Review of Current Literature. 9th Global Business Research Congress. https://doi.org/10.17261/pressacademia.2023.1759
Phuong, N. T. T., & Huong, N. T. (2022). Are longer annual reports less readable? Evidence from foreign firms listed on the United States Stock Exchanges. Journal of Science and Technology, 20(6). https://doi.org/10.31130/ud-jst.2022.095e
Qian, Y., & Sun, Y. (2021). The Correlation Between Annual Reports’ Narratives and Business Performance: A Retrospective Analysis. SAGE Open, 11(3). https://doi.org/10.1177/21582440211032198
Rahman, A., & Nadhirin, A. (2022). THE EFFECTS OF ANNUAL REPORT READABILITY ON THE AUDIT FEES. Assets: Jurnal Akuntansi Dan Pendidikan, 11(2). https://doi.org/10.25273/jap.v11i2.10335
Rajabalizadeh, J., & Schadewitz, H. (2025). Audit report readability and information efficiency: evidence from the Tehran Stock Exchange. Journal of Accounting in Emerging Economies, 15(2), 491–516. https://doi.org/10.1108/JAEE-08-2024-0344
Rjiba, H., Saadi, S., Boubaker, S., & Ding, X. (Sara). (2021). Annual report readability and the cost of equity capital. Journal of Corporate Finance, 67. https://doi.org/10.1016/j.jcorpfin.2021.101902
Santos-Jaén, J. M., Valls Martínez, M. del C., Martín de Almagro Vázquez, G., & León-Gómez, A. (2025). The Impact of Audit Fees and Auditor Tenure on Company Valuation: An Analysis of Large U.S. Audit Firms. North American Journal of Economics and Finance, 79. https://doi.org/10.1016/j.najef.2025.102467
Schneider, A. (2011). Is investment decision-making influenced by perceptions relating to auditors’ client dependence and amount of audit fees? Advances in Accounting, 27(1). https://doi.org/10.1016/j.adiac.2010.10.006
Serly, V., & Helmayunita, N. (2019). The Correlation of Audit Fee, Audit Quality and Integrity of Financial Statement. 2nd Padang International Conference on Education, Economics, Business and Accounting. https://doi.org/10.2991/piceeba2-18.2019.9
Shagerdi, A. G., Mahdavipour, A., Jahanshiri, R., Baghdar, A. T., & Shagerdi, M. S. G. (2020). Investment Efficiency and Audit Fee from the Perspective of the Role of Financial Distress. EUROPEAN RESEARCH STUDIES JOURNAL, XXIII(Issue 1). https://doi.org/10.35808/ersj/1552
Shakhatreh, M. Z., Alsmadi, S. A., & Alkhataybeh, A. (2020). The effect of audit fees on disclosure quality in Jordan. Cogent Business and Management, 7(1). https://doi.org/10.1080/23311975.2020.1771076
Shauki, E. R., & Oktavini, E. (2022). Earnings Management and Annual Report Readability: The Moderating Effect of Female Directors. International Journal of Financial Studies, 10(3). https://doi.org/10.3390/ijfs10030073
Soesanto, S., & Wijaya, H. (2022). The Effect of Readability of Annual Reports and Value Relevance of Financial Information on Agency Costs with Analyst Coverage as Moderating Variable. Jurnal Akuntansi Dan Keuangan, 24(1). https://doi.org/10.9744/jak.24.1.46-56
Spence, M. (1978). JOB MARKET SIGNALING. Uncertainty in Economics, 281–306. https://doi.org/10.1016/B978-0-12-214850-7.50025-5
Xiao, T., Geng, C., & Yuan, C. (2020). How audit effort affects audit quality: An audit process and audit output perspective. China Journal of Accounting Research, 13(1). https://doi.org/10.1016/j.cjar.2020.02.002
Xu, Q., Fernando, G., Tam, K., & Zhang, W. (2020). Financial report readability and audit fees: a simultaneous equation approach. Managerial Auditing Journal, 35(3). https://doi.org/10.1108/MAJ-02-2019-2177
Xu, W., Yao, Z., & Chen, D. (2019). Chinese annual report readability: measurement and test. China Journal of Accounting Studies, 7(3). https://doi.org/10.1080/21697213.2019.1701259
Yu, Z. (2022). Financial Report Readability and Accounting Conservatism. Journal of Risk and Financial Management, 15(10). https://doi.org/10.3390/jrfm15100454
Zandi, G., & Abdullah, N. A. (2019). Financial statements timeliness: The case of Malaysian listed industrial product companies. Asian Academy of Management Journal, 24. https://doi.org/10.21315/aamj2019.24.s2.9
Zhang, J., Zhang, W., Li, Y., & Caglayan, M. (2021). Decision Time and Investors’ Portfolio Strategies. Pacific-Basin Finance Journal, 68. https://doi.org/10.1016/J.PACFIN.2020.101344
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 E-Jurnal Akuntansi

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.