The Primacy of Numbers in Financial and Accounting Disclosures : Implications for Textual Analysis Research

Numbers are central to financial and accounting disclosures, yet current textual analysis research generally ignores numbers within disclosures. We hypothesize and show that the prevalence of numbers within a corporate disclosure is highly correlated with the readability of the disclosure. More importantly, we show that prior findings on the links between disclosure readability and various economic outcomes are explained by the prevalence of numbers within the disclosures. We discuss implications for past and future research that attempts to analyze the determinants, attributes and outcomes of financial and accounting disclosures