arbiter
JournalsAccount

Repaying the trust: social trust and the readability of form 10-K reports

Mussa Hussaini et al.

Journal of Accounting Literature2026https://doi.org/10.1108/jal-12-2024-0379article
AJG 3ABDC A
Weight
0.50

Abstract

Purpose This study aims to explore the relationship between social trust and financial reporting obfuscation, defined as a lack of annual report readability. We propose that social trust is an important informal institution that promotes ethical behavior and accountability, leading corporate managers to produce clearer, more accessible annual reports for stakeholders. Design/methodology/approach Using a sample of 44,799 firm-year observations from 1,076 publicly listed US firms, we analyze the impact of regional social trust on the readability of financial reports. We further investigate how this relationship varies across different organizational and managerial characteristics, including stakeholder orientation, geographical dispersion, monitoring environments, managerial capabilities and chief executive officer (CEO) experience. Findings Our results provide strong evidence that firms located in regions with higher social trust produce less obfuscated financial reports. This negative relationship is more pronounced in firms with higher stakeholder orientation, lower geographical dispersion, stronger monitoring environments, more capable managers and CEOs with broader work experience (generalist CEOs). Practical implications The findings suggest that social trust is a significant driver of financial report readability. This has important implications for external stakeholders, managers and policymakers in understanding the role of informal institutions in corporate reporting practices. Originality/value This study contributes to the accounting literature by identifying social trust as a key factor influencing the clarity of financial reports and by providing insights into the underlying mechanisms through which this relationship operates.

Open via your library →

Cite this paper

https://doi.org/https://doi.org/10.1108/jal-12-2024-0379

Or copy a formatted citation

@article{mussa2026,
  title        = {{Repaying the trust: social trust and the readability of form 10-K reports}},
  author       = {Mussa Hussaini et al.},
  journal      = {Journal of Accounting Literature},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1108/jal-12-2024-0379},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

Repaying the trust: social trust and the readability of form 10-K reports

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.