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The fog index in accounting research: contributions and challenges

Efretuei, E and Hussainey, K (2022) The fog index in accounting research: contributions and challenges. Journal of Applied Accounting Research. ISSN 0967-5426

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Purpose: The objective of this paper is to review the use of the fog index in accounting research.
Design/methodology/approach: This paper uses a systematic literature review (SLR) methodology with a sample of 126 accounting research articles. The review applies the theoretical framework of disclosure's stewardship, valuation and accountability roles to identify the contributions and challenges of using the fog index in accounting research.
Findings: This paper shows that the primary contribution of the fog index to accounting research relates to the disclosure obfuscation hypothesis (e.g. whether management obfuscates narratives associated with earnings). It also finds that the challenge in using the fog index is in disentangling its measure of firm environmental complexity from narrative obfuscation. Regarding disclosure utility, there is limited evidence on the differential effects of complexity on investor types and whether the fog index findings are associated with narrative obfuscation or firm environmental complexity is driven by investor types.
Research limitations/implications: The authors develop a research database of fog index studies categorised based on contributions to disclosure obfuscation or disclosure utility, highlighting contributions to the stewardship, valuation and accountability roles of disclosures, which researchers can use to develop future studies.
Originality/value: This paper contributes to accounting literature by offering the first comprehensive review on the use of the fog index in accounting research. It offers researchers a consolidated review of the study of linguistic complexity of accounting information and disclosure functions using a theoretical framework that can inform regulators, policymakers and future researchers in designing future research/policy.

Item Type: Article
Additional Information: This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact permissions@emerald.com
Uncontrolled Keywords: 1501 Accounting, Auditing and Accountability; 1503 Business and Management
Subjects: H Social Sciences > HF Commerce > HF5001 Business
H Social Sciences > HF Commerce
H Social Sciences > HF Commerce > HF5601 Accounting
Divisions: Business & Management (from Sep 19)
Publisher: Emerald
SWORD Depositor: A Symplectic
Date Deposited: 20 Sep 2022 09:36
Last Modified: 20 Sep 2022 09:45
DOI or ID number: 10.1108/jaar-09-2021-0243
URI: https://researchonline.ljmu.ac.uk/id/eprint/17601
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