Readability and Corporate Communication: The Case of Four Banks in Ghana

Abstract

Financial reporting is a key communication tool used by banks to communicate with investors and regulators. It is thus expected that annual financial reports are made as readable as possible to enhance communication. In this paper, attention is given to the readability of annual financial reports of four Ghanaian banks. The objective is to evaluate the readability of these reports and to establish differences in readability across the reports of the four banks. Convenience sampling was employed to sample annual reports of four banks (GCB, ADB, Fidelity, and Unibank) covering the years 2013 to 2016. SMOG readability index was computed from these reports. Means, standard deviations, and independent sample t-test, with bootstrapping, were used to analyse the data. The results revealed that all four banks used difficult words and sentences to write their reports. In addition, it was established that banks on the GSE and those not on the GSE did not differ in terms of the readability of their annual reports. It is suggested that the banks revisit their writing styles in order to make their reports readable.