Journal of Accounting Review  2024/01
Vol.78   85-122

Revelation between the Lines of CSR Reports: Readability Measure for Traditional Chinese and ESG Score

Yu-Kuo Chiang/Department of Accounting, National Taiwan University
Hsiou-Wei Lin/Department of International Business, National Taiwan University


This study proposes the view that the CRIE value, a Traditional Chinese readability index commonly used by domestic financial accounting circles, is inversely proportional to the specificity of the company’s Chinese CSR report content. This study hand-collects and examines the CSR reports issued by listed companies in Taiwan from 2015 to 2021 to explore the relationship between ESG performance and the CRIE value of the report. The CRIE value relies on the number of difficult words in the report to measure its readability, while the company’s ESG performance is evaluated by using TESG sustainability scores with respect to the performance in ESG for each of the three (E, S, and G) pillars, with the score for the degree of information disclosure for each pillar excluded, to identify under-performing and over-performing companies in terms of the ESG score. The research investigates whether the disclosure behaviors of companies change with their ESG performance. Empirical results show that companies with excellent or significantly improved ESG performance tend to use more difficult words in their reports. Conversely, companies with lower ESG performance are more likely to reduce the number of difficult words used. For companies with excellent or greatly improved ESG performance, the institutional investor ownership ratio and capital expenditure ratio further moderate the association between ESG performance and the use of difficult words in the reports. This indicates that companies with good ESG performance believe that using more difficult words provides more specific and objective information, thus optimizing communication effects. Therefore, this study suggests that researchers should use readability indices with caution, especially the traditional CRIE index, and that the number of difficult words in the report can also help stakeholders distinguish companies that are leading or lagging in actual ESG performance. 


ESG performanceCSR reportsReadability

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