Financial reports can be regarded as the primary means of communication between a companys
management and its shareholders. The reports also address all other kinds of stakeholders like
employees suppliers customers competitors governments potential investors bond holders
and in a broad sense the entire society. Still it is questionable whether managers really
deliver true information in their reports. One possible way of obscuring corporate information
when results are negative or of being forthcoming in disclosing information when results are
good is to adjust the reports readability which can influence understandability as a
consequence. The concrete aim of this study is to focus on the readability of letters to the
shareholders of bilingual (German and English) quarterly reports of listed companies at
Frankfurt Stock Exchange. It is examined how various factors influence the readability of
company reports.
