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Why does decomposed audit proposal readability differ by audit firm size? A Coh-Metrix approach

Yu-Tzu Chang (Department of Accounting, National Chengchi University, Taipei City, Taiwan)
Dan N. Stone (Von Allmen School of Accountancy, University of Kentucky, Lexington, Kentucky, USA)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 28 June 2019

Issue publication date: 7 October 2019




This paper aims to introduce the emerging artificial-intelligence-based readability metrics (Coh-Metrix) to examine the effects of firm size on audit proposal readability.


Coh-Metrix readability measures use emerging computation linguistics technology to better assess document readability. These metrics measure co-relations of words, sentences and paragraphs on multi-dimensions rather than adopting the unidimensional “bag of words” approach that examines words in isolation. Using eight Coh-Metrix orthogonal principal component factors, the authors analyze the Chang and Stone (2019) data set comprised of 370 hand-collected audit proposals submitted by audit firms for the US state and local governments’ audit service contracts.


Audit firm size has a significant impact on the readability of audit proposals. Specifically, as measured by the traditional readability metric, the proposals from smaller firms are more readable than those submitted by larger firms. Furthermore, decomposed readability metrics indicate that smaller firm proposals evidence stronger (deep) text cohesion, whereas larger firm proposals evidence a stronger narrative structure and higher connectivity (relational indicators) among proposal elements. Unlike the traditional readability metric, however, the emergent readability metrics are uncorrelated with auditor selection.

Research limitations/implications

Work remains to develop and validate Coh-Metrix measures that are specific to the context of accounting and auditing practice. Future research can use emerging readability measures to examine various textual features (e.g. text cohesion) in finance or accounting related documents.

Practical implications

The results provide practitioners with insight into the proposal writing strategies and practices of larger and smaller firms. In addition, the results highlight the differing audit firm selection outcomes from traditional and Coh-Metrix readability metrics.


This study introduces new data and holistic readability measures to the auditing literature.



The authors are grateful for helpful comments from Louise Hayes (the editor), Efrim Boritz (the reviewer), Mary Curtis (the reviewer), Jerrard Gaertner (the discussant) and participants at the 2017 Research Symposium at University of Waterloo. Thanks to the University of Kentucky, the Von Allmen School of Accountancy, the Gatton College of Business and National Chengchi University (Taiwan) for financial support. Thanks also to Professor Chang’s dissertation committee members (Simon Bonner, Monika Causholli and Urton Anderson) for help and support and to Kinney Poynter of the National Association of State Auditors, Comptrollers and Treasurers (NASACT) for assistance and insights.

This paper forms part of a special section “Textual-Analysis for Research in Professional Judgment and Decision Making, Audit and Assurance, Risk, Control, Governance, and Regulation”, guest edited by Louise Hayes.


Chang, Y.-T. and Stone, D.N. (2019), "Why does decomposed audit proposal readability differ by audit firm size? A Coh-Metrix approach", Managerial Auditing Journal, Vol. 34 No. 8, pp. 895-923.



Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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