Readability of Annual Financial Reports, Information Efficiency, and Stock Liquidity: Practical Guides From the Saudi Business Environment

This research investigates the impact of the annual financial report's readability on the efficiency of information and the level of stock liquidity. To achieve these objectives, the study used content analysis to examine the annual financial reports of a sample of (109) non-financial joint stock companies that are listed in the Saudi Stock Exchange from (2017 to 2021), with a total of 545 views, the study also used the linear decline model to test the study's hypotheses. The study found a correlation between the readability of the annual financial report and the efficiency of information and stock liquidity and based on this, the study recommends that companies and professional organizations should work on improving the readability of annual reports, in addition to analyze the factors affecting it, and to review both mandatory and voluntary disclosure requirements, in order to help the users of the financial statements to understand relevant information and to facilitate making decisions. This research contributes to the finance and accounting literature by focusing on the linguistic features of financial reports by providing practical evidence for the impact of the annual financial report's readability on the efficiency of information and stock liquidity in one of the emerging capital markets. However, these results must be considered with the limitation of the research period, the sample size, and methods of measuring the study variables.