Intelligibility of communication with stakeholders after accounting system change: an exploratory data analysis of Italian universities

Abstract Purpose – This study aims to explore the intelligibility of communication with stakeholders as a result of accrual accounting adoption. It focuses on changes in the use of visual forms and the readability of text that occurred immediately after the adoption of accrual accounting in performance reports of Italian public universities. Design/methodology/approach – The authors collect the stakeholder section of performance reports published before and after accrual accounting adoption. Then, the authors use manual and computer-assisted textual analysis. Finally, the authors explore the data using principal component analysis and qualitative comparative analysis. Findings – This study demonstrates that switching from cash to accrual accounting provokes immediate changes in communication patterns. It confirms the significant reduction of readability and increase in visual forms after accruals accounting adoption. The results indicate that smaller universities especially put effort into increasing intelligibility while implementing a more complex accounting system. This study also finds a relation between the change in readability and the change in visual forms that are complementary, with the exception of several very large universities. Practical implications – The findings underline the possibility of neutralising the adverse effects of accounting reform associated with its complexity and difficulties in understanding by the use of visual forms and attention to the document’s readability. Originality/value – This paper adds a new dimension to the study of public sector accounting from the external stakeholder perspective. It provides further insight into the link between accrual accounting adoption and readability, together with the use of visual forms by universities.