This document summarizes Khaled Hussainey's personal journey in corporate narrative reporting research over the last 20 years. It begins with his education background and then discusses how he got interested in accounting research during his bachelor's degree. It describes how he began his PhD studying how accounting numbers affect stock prices. It outlines how he read extensively from top journals and conferences to identify a research gap around measuring narrative disclosure. His first published paper used software to measure forward-looking disclosure in UK annual reports. Since then he has published over 130 papers, supervised many PhD students, and examined over 98 theses. The document highlights some of his contributions to the field and collaborations with colleagues that have extended his work in areas like risk reporting.

1. CORPORATE NARRATIVE REPORTING:
A PERSONAL JOURNEY
KHALED HUSSAINEY
PROFESSOR OF ACCOUNTING AND FINANCIAL MANAGEMENT

2. Short Bio
Education:
• B.Com. in Accounting, Ain Shams University (Egypt).
• M.Sc. in Accounting & Finance, The University of Birmingham (UK).
• Ph.D. in Accounting & Finance, The University of Manchester (UK).
Research
• Editor of JFRA and Associate Editor of JAAR & IJAAPE
• 130+ published papers in refereed Journals.
• A number of best paper awards.
PhD Experience
• PhD completion to date 42 theses (21 of them on narrative reporting).
• Currently – I am a supervisor for 18 PhD students.
• PhD examination to date 98 theses (85 External and 13 Internal examination).

3. Introduction
• The workshop reviews the changes which have taken place
in corporate narrative reporting research over the last 20
years. I will start by briefly describing my personal journey:
setting off in 2000, and the changes which have taken place
to date.
• Although the title of the workshop refers to my personal
journey, I have worked with many colleagues and PhD
students around the world over the years, and I will mention
a number of colleagues during my presentation. I will also
mention the work of some of the PhD students who have
been extending my work.

4. My journey - Setting off
During my Bachelor degree, I was interested in reading
more about both financial and management accounting
Financial Accounting
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5. My journey - Setting off
• Before starting my postgraduate study in the UK - I was told,
‘there wasn’t much to do in accounting field’; ‘there is nothing new
to find about accounting anymore’. ‫قتل‬
‫بحثا‬
• I joined the University of Birmingham in 1999.
• I showed interest to my supervisor, Amanda Nayak, and she was
happy with my research idea. It was related to management
accounting.
• In my dissertation – I studied the integration of Activity Based
Costing (ABC) with Economic Value Added (EVA).

6. My journey - Setting off
• I joined the University of Manchester in 2000 as a PhD student – my
proposal was about how accounting numbers affect stock prices
(Supervisors: Professor Martin Walker and Dr. Thomas Schleciher).
• Reading articles from top-ranked journals was one of the golden
direct advices I have received from my PhD supervisors.

7. Read, Read, Read, ……..
- Academic accounting research journals
- Top-quality accounting conferences
- Top-quality business schools and top-quality
researchers
- Professional Accounting publication
- Financial news
- Accounting-related regulations

8. ABS Rankings
ABS Ratings (2018)
• 4*
• 4
• 3
• 2
• 1
Academic Journal Quality Guide:
http://www.bizschooljournals.com/

9. Financial Accounting Journals in 2018 ABS List

10. First article I read & criticise!!!
• Schleicher, T. and Walker, M. (1999). “Share price anticipation
of earnings and management’s discussion of operations and
financing”. Accounting and Business Research, 29 (4): 321–35.
I also read:
Schleicher, T. (1996). Corporate Financial
Disclosure and Share Price Anticipation of
Earnings. MPhil Dissertation, Manchester
University.

11. REVIEW ARTICLES IN ACCOUNTING
- Textual Analysis of Corporate Disclosures: A Survey of
Literature
- Accounting Narratives: A Review of Empirical Studies of
Content and Readability
- Management Discussion and Analysis: A Review and
Implications for Future Research
- Environmental Disclosure Research: Review and Synthesis

12. Other review articles
• Journal of Accounting and Economics (ABS 4*)
- A Review of the Empirical Disclosure Literature: Discussion’.
- Information Asymmetry, Corporate Disclosure, and the Capital
Markets: A Review of the Empirical Disclosure Literature’
- The Financial Reporting Environment: Review of the Recent
Literature’,
• Accounting and Business Research (ABS 3*)
- Motives for disclosure and non-disclosure: A framework and
review of the evidence.

13. top-quality conferences
• American Accounting Association
http://aaahq.org/
European Accounting Association
http://www.eaa-
online.org/r/default.asp?iId=FDJHJD
British Accounting and Finance Annual
Conference
http://bafa.ac.uk/
Canadian Academic Accounting Association
Conference
https://www.caaa.ca/en
Accounting and Finance Association of
Australia and New Zealand Conference
http://www.afaanz.org/conferences
Journal of Accounting Research conference
Journal of Accounting & Economics Annual
Conference
Review of Accounting Studies Conference
The annual symposium of The International
Journal of Accounting
Journal of Accounting, Auditing and Finance
Conference
Accounting Organizations & Society
Conference
Contemporary Accounting Research
Conference
http://www.ssrn.com/en/index.cfm/arn/arn-professional-announcements/

15. Research from top-quality business
schools and top-quality researchers
• Editors and Associate editors of top-quality journals in
your field.
• Keynote speakers at top-quality conferences.
• Top quality researchers in your field.
• Top quality universities (check universities ranking).
• Check top-rated business school around the world.
• Regularly check key authors in your field in business
school.

16. Professional Accounting publication
- Professional Accounting websites: ACCA, CIMA, AICPA,
ICAEW; Deloitte, KPMG, Ernst & Young and
PricewaterhouseCoopers.
- Twitter/Facebook of professionals (e.g., financial
analysts)
- Professional forums.

17. Financial news
- Newspapers (i.e. Financial times)
- TV Business Programs.
- CNBS, the world leader in business news and
real-time financial market coverage

18. Accounting-related regulations
• Legislation:
• broad rules
• Companies Act 2006 in UK
• Accounting standards:
• detailed rules
• national standards
• international standards
• Stock exchange regulations
e.g. requirement to publish quarterly figures

19. What do we mean by ‘reporting’ or ‘disclosure’?
The word ‘reporting’ or ‘disclosure’ simply refers to
information made available by insiders (managers) to
outsides (stakeholders).
In the literature, a disclosure is defined as:
 any release of information, whether financial or non-
financial, numerical or qualitative, mandatory or voluntary, or
via formal or informal communication channels, by a firm, to
the public in general and to a restricted group of information
users on particular stakeholders (e.g. investors, analysts
and creditors).

20. Why should companies disclose their
information?
Accounting regulation
- In the UK, financial accounting is regulated
according to “International Financial Reporting
Standards” (IFRS).
- Accounting regulation may require companies to
disclosure information
- Stock exchange also may require additional
information for listing companies.
Reduce information asymmetry between insiders
(managers) and outsiders (stakeholders) or to signal their
good performance or to access to finance or to attract
potential investors …etc.

21. Disclosure can be:
Financial or Non-financial information
Financial information: all information related to performance and
financial position of the company:
 Information related to assets and its financial position
 Information related to liabilities and its obligations
 Information related to equity, revenues, expenses…
Non-financial information: all information other than financial
information such as:
 information related to corporate governance of the
company,
 information related different products of a company
 Information related to new product lines
 Information related to expand operations
 Information related to the competitive position of the
company in the market
 Information related to firm strategy
 Information related to risk & uncertainty

22. Disclosure can be:
Mandatory or Voluntary
Mandatory disclosure: disclosure required by accounting
standards and accounting requirements such as financial
statements:
 Income statement
 Statement of financial position
 Cash flow statement
 Statement of change in equity
 Notes to financial statements
Voluntary disclosure: any disclosure in excess of
mandatory disclosure
 Not required by accounting standards
 Provided voluntarily by companies
 Help investors to know more about the
company

23. Disclosure can be:
Numbers or Narratives
Vodafone Plc: Income statement

24. Disclosure channels
Corporate disclosure can take many forms such as
 Annual reports,
 Interim reports (semi-annual/quarterly / monthly reports)
 Conference calls provided by the company (e.g., includes new
information about company’s products)
 Internet disclosure (online reporting): disclosure on companies websites
 Press Release
 Face-to-face meetings with analysts
 Social media (Facebook, Twitter, …)
 The official channel for disclosure is the annual report.
All companies have to publish their annual reports

25. What is Corporate Narrative Reporting?
• Narrative is a written report of connected events; a story.
• It is a soft talk discussion and analysis reported alongside financial
statements.
• It helps stakeholders to see the company from the eyes of the
board of directors.
In corporate narrative reporting, many topics are discussed such as:
• Nature of business, including a description of the market and regulatory
environment
• Current and future development in performance
• Current and future development in the financial position
• Risks and uncertainties
• Social and environmental matters

26. Why Narrative Reporting Matter?
- Financial statements lost their relevance and
hence traditional accounting model no longer
satisfies users’ needs (Lev, 1989).
- Call for a comprehensive model of business
reporting that includes forward-looking
information relating to strategy and risk, non-
financial performance measures and soft,
narrative information relating to intangible
assets and the value creation process, to
complement the financial information on
outcomes.

27. Arguments for Corporate Narrative Reporting
1) It is used as a tool to communicate what cannot be
delivered by financial statements.
 Financial statements do not include all types information
 Information in the financial statements is purely historical
 It complements financial statements and allows managers to
convey information not recognized in financial statements
(e.g., Forward-looking information)
 It provides discussion of the amounts in the financial
statements. It provides useful context to understand the
financial statements amounts

28. Arguments for Corporate Narrative Reporting
2) It reduces the information asymmetry problem between
managers and stakeholders
 Managers know much more information about the company
than investors (information asymmetry)
 To reduce this information asymmetry problem, managers
provide more information to investors in the form of narrative
discussion
 It is a mean for managers to convey their perspectives of the
firm to outside investors.

29. Arguments for Corporate Narrative Reporting
3) Most important source of information for different
stakeholders
 Financial analysts depend on narrative discussion
and analysis in the annual report in preparing their
reports
 Potential investors analyse narrative reporting
statements when making their decisions

30. Arguments against Corporate Narrative Reporting
- Corporate narrative reporting might affect the company’s
competitive advantage.
- Managers may use narrative reporting to mislead
investors
- Narrative reporting may provide a disclosure medium for
managers to engage in impression management
practices.
 Impression management is regarded as attempts “to
manipulate the impression conveyed to users of
accounting information”.
 In the narrative disclosure, bad information could be
provided in a good way

31. After reading a number
of articles, I successfully
find a research gap
• Core (2001 : 452) argues: ‘Improved measures of disclosure quality also
need to be developed. The AIMR discontinued its disclosure rankings in
1997 (after ranking fiscal year 1995). There may be some small problems
of judgment error in the metrics constructed by Botosan (1997), Lang and
Lundholm (2001), and Miller (1999), but the real problem with these
measures is that they are so labour-intensive that they are feasible only
for small samples. Here, I conjecture that researchers can substantially
lower the cost of computing these metrics by importing techniques in
natural language processing from fields like computer science to measure
levels of disclosure.
• It was a challenge, but I made it. I measured forward-looking
disclosure in a sample of 8000 UK annual reports using Nvivo
software. It was the first large-scale narrative disclosure study in the
UK.

32. My contribution(s)
• I used the Non-numerical Unstructured Data-Indexing,
Searching, & Theorizing (NUD*IST) software to measure levels
of disclosure (now it called QSR or Nvivo).
• I used a single type of disclosure (forward-looking disclosure)
rather than the overall disclosure levels.
• I showed evidence that my new disclosure score is reliable and
valid.
• I linked the disclosure score with stock market reaction.

33. My first published paper
• Hussainey, K., Schleicher, T. and Walker, M. (2003). Undertaking
large-scale disclosure studies when AIMR-FAF ratings are not
available: the case of prices leading earnings. Accounting and
Business Research, 33 (4), 275-294.

34. A certificate of an
outstanding PhD thesis in the
Interdisciplinary Accounting
Research Category of the
Emerald/EFMD 1st Annual
Outstanding Doctoral
Research Awards in 2004.
The title of the thesis:
A study of the ability of (partially)
automated disclosure scores to
explain the information content of
annual report narratives for future
earnings.

35. Research Fund:
Financial disclosure and earnings
timeliness: A sector specific approach
Loss Making Firms
Vs.
Profit Making Firms
High Growth Firms
Vs.
Low Growth Firms

36. Schleicher, T. Hussainey, K. and
Walker, M. (2007). Loss firms'
annual report narratives and share
price anticipation of earnings. The
British Accounting Review, 39 (2),
153-171.
The British Accounting Association/Association
of Chartered Certified Accountants Prize the
most outstanding of the articles published in
the British Accounting Review during 2007.

37. Hussainey, K. and Walker, M. (2009). The effects of voluntary
disclosure policy and dividend propensity on prices leading
earnings. Accounting and Business Research, 39 (1), 37-55.
Aim:
We examine disclosure and dividend
policy for high and low growth firms
Research question:
Are disclosure and dividend are
substitutes or complements?

38. Mouselli, S., Jafaar, A. and Hussainey, K. (2012). Accruals
quality vis-à-vis disclosure quality : substitutes or
complementary ? The British Accounting Review, 44(1):
36-46.

39. Wang, M. and Hussainey, K. (2013). Voluntary forward-looking
statements driven by corporate governance and their value
relevance. Journal of Accounting and Public Policy, 32 (3), 26-49.

40. Enache, L and Hussainey, K. (2020). The substitutive relation
between voluntary disclosure and corporate governance in
their effects on firm performance. Review of Quantitative
Finance and Accounting, forthcoming.

41. Athanasakou, V. and Hussainey, K. (2014). The perceived
credibility of forward-looking performance disclosures,
Accounting and Business Research, 44:3, 227-259.

42. Hassanein, A, Zalata, A. and Hussainey, K. (2019). Do
forward-looking narratives affect investors’ valuation of UK
FTSE all-shares non-financial firms? Review of Quantitative
Finance and Accounting, 52 (2): 493-519.
Hassanein, A and Hussainey, K. (2015). Is forward-looking
financial disclosure really informative? Evidence from UK
narrative statements. International Review of Financial
Analysis, 41, 52-61.
Dr. Ahmed Hassanein

43. Corporate Narrative Risk Reporting
Professor Tamer Elshandidy
Ajman University
- Tamer started his PhD at Stirling University in 2009.
- He has completed his PhD in 2011 – he examined the risk reporting
incentives in Germany, UK and USA.
- We published 2 articles from his thesis with Professor Ian Fraser at
International Review of Financial Analysis (ABS 3*) and The British
Accounting Review (ABS 3*).
- I have supervised 7 PhD theses on corporate risk disclosure to date.

44. Ibrahim, A. and Hussainey, K. (2019). Developing the narrative
risk disclosure measurement. International Review of Financial
Analysis, 64: 126-144.
Dr. Awad Ibrahim

45. • Moumen, N., Ben Othman, H and Hussainey, K. (2015). The value relevance
of risk disclosure in annual reports: Evidence from MENA emerging markets.
Research in International Business and Finance, 34, 177-204.
• Moumen, N., Ben Othman, H and Hussainey, K. (2017). Board structure and
the informativeness of risk disclosure: evidence from MENA emerging
markets. Advances in Accounting, incorporating Advances in International
Accounting, 35, 82-97.
• Moumen, N. and Grassa, R. and Hussainey, K. (2020). What drives risk
disclosure in Islamic and conventional banks? An international comparison.
International Journal of Finance and Economics, forthcoming.
• Grassa, R., Moumen, N. and Hussainey, K. (2020). Is bank creditworthiness
associated with risk disclosure behavior? Evidence from Islamic and
conventional banks in emerging countries? Pacific-Basin Finance Journal,
forthcoming.
Dr. Najia Moumen

46. Haj-Salem, I; Damak Ayadi, S. and Hussainey, K. (2020). The
joint effect of corporate risk disclosure and corporate
governance on firm value. International Journal of
Disclosure and Governance, forthcoming.
Haj Salem, I, Damak, S. and Hussainey, K. (2019). Corporate
governance and risk disclosure quality: Tunisia evidence.
Journal of Accounting in Emerging Economies, 9 (4): 567-
602.
Dr. Issal Haj-Salem

47. Dr. Tawida Elgattani
Dr. Aziza Alqamshou
Dr. Hidaya Al Lawati

48. Summary of my contributions to
Corporate Narrative Reporting literature
• In total, around 130 research papers to explore:
• The actual practice of corporate narrative reporting
around the world.
• The key drivers of the disclosure decision
(determinants)
• The economic consequences and non-economic
consequences of the disclosure decision.
• Corporate narrative reporting pre and post the financial
crisis.
• How big data affect corporate narrative reporting?

49. Key findings
• Levels of corporate narrative disclosure vary
between companies (and countries).
• Firm characteristics; corporate governance
and country-level characteristics are the
main determinants for corporate narrative
reporting.
• Corporate narrative reporting affects cost
of capital; firm performance and financial
analysts’ earnings forecasts.

50. Types of Narrative Information covered
• Forward-looking disclosures
• Disclosure tone (Good news/bad news)
• Risk disclosures
• Key Performance Indicators (KPIs) disclosures
• Intellectual capital disclosures
• Social & environmental disclosures
• Corporate governance disclosures
• Segmental reporting
• R&D disclosures
• Company-specific disclosures (Reserves in Oil & Gas industry).
• Product-related disclosures
• Islamic-related disclosures

51. Empirical methods used
• In most cases, I use the quantitative method
(regression analysis; content analysis)
• I also used questionnaires (quantitative) &
interviews (qualitative)
• In my future research, I am trying to use mixed
methods (quantitative and qualitative).

52. • A major gap in “Corporate
Narrative Reporting”
literature
• It is assumed that disclosure quantity
is a proxy for disclosure quality

53. Limitations of narrative reporting
measures
• “Researchers investigating the determinants
and consequences of disclosure quality could
be wasting their effort if the primary variable
of interest [disclosure] is not being measured
with a sufficient degree of accuracy”. Beattie
et al. (2004: 233)

54. Limitations of narrative reporting
measures
 Beyer et al. (2010:311) review prior research
different proxies for disclosure quality and
conclude that:
“a sensible economic definition of voluntary
disclosure/ financial reporting quality and direct
derivation of measures from that definition is
missing from the literature. This lack of an
underlying economic definition hinders our ability
to draw inferences from this work, and we
recommend that future research address this
issue”.

55. Measuring disclosure quality
• Disclosure quality is “A complex, multi-
dimensional, context-sensitive and subjective
concept”. (Beattie et al, 2004).
• Measuring disclosure quality has been regarded
as an extraordinary difficult (Botosan, 2004
and Beretta & Bozzolan, 2004).
55

56. A suggestion for measuring disclosure quality
The development of a disclosure quality
framework should begin with well-
supported and convincing discussions
of the characteristics of information
that define disclosure quality and why the
characteristics selected are essential
ingredients of disclosure quality (Botosan,
2004).

57. A new measure for narrative disclosure
quality
International Accounting Standards
Board (IASB)
•Relevance
•Faithful representation
•Understandability
•Comparability
•Timeliness
57

58. A new measure for narrative
disclosure quality
UK Accounting Standard Board: OFR Qualitative
Information Attributes
• Forward-looking orientation
• Supplement and complement financial reports.
• Comprehensiveness
• Understandability
• Balance and Neutrality
• Comparability
• Relevance
• Timeliness
• Verifiability
58

59. Successful attempts of measuring
disclosure quality
• The quality of overall voluntary disclosure (with Chakroun, University
of Sfax) - Corporate Ownership and Control.
• The quality of key performance indicators disclosure (with Elzahar,
Damitta University; Mazzi, University of Florence and Tasalavoutas, Glasgow
University) - The International Review of Financial Analysis
• The quality of corporate social responsibility disclosure (with
Alotaibi, Shaqra University) - International Journal of Disclosure and
Governance & Corporate Ownership and Control.
• The quality of reserve disclosure in the Oil and Gas industry (with
McChlery, Glasgow Caledonian University; Reza Kouhy, Abertay University
and Catriona Paisey, Glasgow University) - Applied Economics

60. Moving forward
• Diversity and narrative reporting
• Governance reforms and narrative reporting
• Media coverage and narrative reporting
• Readability of narrative reporting and tax avoidance
• Impression management and earnings management
• Social media narrative disclosure
• Non-disclosure (information withholding): measurements,
determinants and consequences.

61. Moving forward
• The views of auditors on the external assurance on narrative
disclosure and the nature of the assurance which might be
provided and the most appropriate way of reporting it.
• Narrative reporting by External Auditors (Extended Auditor’s
Report; Key Audit Matters…etc.).
• Narrative reporting by The Chair of the Audit Committee (Audit
Committee Report)

62. Moving forward
• Economic consequences of narrative reporting: Its impact on
credit ratings, cost of capital, firm performance, firm value,
investment efficiency, capital structure; dividend policy, cash
holding.
• Non-economic consequences of narrative reporting: Its impact
on stakeholders’ satisfaction, trust and loyalty.

63. Moving forward
Current literature covers topics related to:
• Sustainability reporting.
• Integrated reporting
• Related-parties transactions reporting.
• Anti-money laundering and anti-terrorist financing reporting
• Country by country reporting
• COVID-19: Implications for narrative reporting by December
2019 year ends
See: https://www.pwc.co.uk/issues/crisis-and-resilience/covid-
19/covid-19--implications-for-narrative-reporting-by-december-
2019-.html

64. ‫العليم‬ ‫أنت‬ ‫إنك‬ ،‫علمتنا‬ ‫ما‬ ‫إال‬ ‫لنا‬ ‫علم‬ ‫ال‬ ‫اللهم‬
‫علمت‬ ‫بما‬ ‫وانفعنا‬ ،‫ينفعنا‬ ‫ما‬ ‫علمنا‬ ‫اللهم‬ ،‫الحكيم‬
،‫نا‬
‫علما‬ ‫وزدنا‬
Khaled Hussainey
Professor of Accounting and Financial Management
Faculty of Business and Law
Portsmouth University
Telephone: Mobile 07727190105 Office 02392844715
Email: khaled.hussainey@port.ac.uk