A Methodology for the Analysis of Narrative Accounting Disclosures.

The article presents a method for analyzing narrative accounting disclosures of financial information. The authors use a computer program called WORDS to provide a content analysis of the narrative elements of financial statements by looking at word frequency. The program catalogs the words into various classifications and then creates a statistical analysis of the words. The WORDS program was used to analyze annual report disclosures from companies that may or may not have released misleading financial information.