Siti Nabilah, M. S.
Nurfarizan Mazhani, M.
Suryani, A. R
Nik Nurul Aswani, N. K
Faculty of Accountancy
Universiti Teknologi MARA, Perak, Malaysia.

 

The study tries to find the relationship between readability of chairman’s statements with current earnings by distinguishing the religious background of the chairman. This study examines top 100 companies under Main Market in Bursa Malaysia in the year of 2010. The testing of relationship between readability of chairman’s statements and current earnings follows the prediction of management obfuscation hypothesis (Courtis, 1998 and Li, 2008). Obfuscation hypothesis discusses on the management’s practice to purposely make the annual report difficult to read by increasing the length (words per sentence, syllables per word etc) and increasing the usage of jargons in the writing (Sheikh Abu Bakar & Ameer, 2010) in order to hide the adverse current performance, suggesting that the readability is based on the management’s ethic. Since Islam is premised on ethical and moral conduct (Mohd. Ibrahim & Yaya, 2005). It is hypothesised that the differentiation between chairman’s religion should yield significant results.

Keywords: Readability, manager obfuscation hypothesis, chairman’s statement, Islamic ethical value