ABSTRACT This study analyzes the relationship between corporate social responsibility performance and sustainability report readability to test the obfuscation hypothesis. It also explores the influence of stakeholder pressure on sustainability report readability. We employ a sample of 1451 sustainability reports from US companies for the period 2017–2023, using the Mundlank within‐between random‐effects model. We find that poor CSR performance may motivate companies to make their reports more readable in the following year to achieve legitimacy. Simultaneously, an improvement in CSR performance may lead to a reduction in readability the following year if companies start using sophisticated language to signal commitment to CSR to attain legitimacy. Our findings show that companies in environmentally sensitive industries present sustainability reports with lower readability than their peers. Additionally, companies in consumer proximity industries tend to disclose more readable sustainability reports than those in other industries. We expand on previous research in this field supporting the rationale that the level of readability may depend on intentional and nonintentional circumstances, such as stakeholder pressure.
Ruiz‐Blanco et al. (Mon,) studied this question.