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<p>This study examines the influence of founder ownership on the readability of financial reports. Our focus lies on the Management Discussion and Analysis (MD&amp;A) segment of the annual reports of Indian firms. By employing the Fog index as a metric for readability assessment, we establish a clear relationship between the level of founder ownership and the readability of financial statements. Furthermore, we demonstrate that the relationship between founder ownership and readability is particularly significant in firms facing more severe financial constraints. Finally, we find that external financing is the leading cause of the connection between founder ownership and financial statement readability. This study is the first to demonstrate that the founder’s ownership level impacts the reading of financial statements.</p>

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Does founder ownership impact the readability of financial reports?

  • 期刊论文

  • 发表日期：

    2025年6月24日

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  • Somya Arora,
  • Yogesh Chauhan

摘要

This study examines the influence of founder ownership on the readability of financial reports. Our focus lies on the Management Discussion and Analysis (MD&A) segment of the annual reports of Indian firms. By employing the Fog index as a metric for readability assessment, we establish a clear relationship between the level of founder ownership and the readability of financial statements. Furthermore, we demonstrate that the relationship between founder ownership and readability is particularly significant in firms facing more severe financial constraints. Finally, we find that external financing is the leading cause of the connection between founder ownership and financial statement readability. This study is the first to demonstrate that the founder’s ownership level impacts the reading of financial statements.