Abstract
Building on theories of obfuscation and deception from accounting and communication literature, we examined 202 fraudulent and non-fraudulent 10-Ks by focusing on 25 linguistic cues. Our findings suggest that authors of fraudulent 10-Ks chose more complex words, signaling words of achievement and cause, and qualifying conjunctions. We found that truthful 10-Ks displayed more present tense verbs and were easier to read as indicated by the FRE readability measure. Those who construct 10-Ks may choose to deceive strategically by hiding bad news in more complicated content while trumpeting good news and achievements.
Recommended Citation
Moffitt, Kevin and Burns, Mary B., "What Does That Mean? Investigating Obfuscation and Readability Cues as Indicators of Deception in Fraudulent Financial Reports" (2009). AMCIS 2009 Proceedings. 399.
https://aisel.aisnet.org/amcis2009/399