Innovation and annual report readability
研究发现年报可读性与创新之间存在倒U型关系，适度降低可读性可促进创新，但过度模糊会适得其反，且这一关系在竞争激烈和风险较高的企业中更为显著。
We explore the relationship between innovation and annual report readability using multiple innovation metrics. While lower readability can boost innovation, an inverted U-shaped link with patents suggests that excessive opacity becomes counterproductive. We identify two underlying mechanisms—preserving competitive advantages and concealing risks. Consistent with the first mechanism, the innovation-readability link is stronger in competitive markets, where firms reduce transparency to better protect themselves from competitors. In line with the second mechanism, the innovation-readability link is stronger for riskier firms. Overall, our findings support the idea that firms strategically tailor their disclosure to match their innovation needs. • Finds an inverted U-shaped link between low readability and innovation performance • Complex annual reports can boost innovation, but too much opacity hinders it • Strategic obfuscation helps firms protect innovation in competitive environments • R&D firms benefit most from balancing clarity and strategic obfuscation