Poor Communication is Alive and Well: A Study of Annual Report Readability

Annual reports are a primary means by which corporations communicate formally with their shareholders, investors, creditors and the general public, and unless this specialized communication medium can be broadly understood, at least some readers will have difficulty arriving at rational investment decisions. Insofar as low levels of annual report comprehension produce resource misallocation behaviour, all of society may be seen to suffer, and not just the individual investor.