Title

Traditional and alternative methods of measuring the understandability of accounting narratives

Document Type

Journal Article

Publisher

Emerald

Faculty

Faculty of Regional Professional Studies

School

School of Business (RPS)

RAS ID

19301

Comments

This article was originally published as: Jones M., Smith M. (2014). Traditional and alternative methods of measuring the understandability of accounting narratives. Accounting, Auditing and Accountability Journal, 27(1), 183-208. Original article available here

Abstract

Purpose: The study aims to explore the use of alternative measures of "understandability" on accounting texts. This includes the meaning identification test (MIT) and the sentence verification technique (SVT), which have not previously been used by accounting researchers, as well as variants on the traditional Cloze tests such as the C-Test. Design/methodology/approach: This study focuses on the understandability of accounting texts and evaluates how reliable the Cloze test is as a measure of comprehension. An experiment was designed and conducted to measure users' performance with a variety of comprehension measures (MIT, SVT, Cloze, C-Test). Findings: The study concludes that the outcomes from the MIT and SVT comprehension tests are not significantly associated with those from the Cloze tests. This implies that while the Cloze test is a good measure of the predictability of accounting narratives, and of textual redundancy, it does not necessarily measure the understandability of the text. Originality/value: These measures of understandability, which have not previously been used in accounting, would enable researchers to test the communicational effectiveness of using different accounting narratives such as annual reports or prospectuses. Such a measure could be used to improve the understandability of accounting narratives. The strengths and weaknesses of the various tests are assessed. It is suggested that there is a need for further experimentation especially with the MIT test.

DOI

10.1108/AAAJ-04-2013-1314

Access Rights

Not open access

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