This study uses the Plain Writing Act of 2010 as an exogenous variation in the readability of 10-K reports to establish the impact of report improvements on firm risk. We find that better readability significantly decreases total and idiosyncratic risks for US firms experiencing shocks to their readability environment during 2001–2016. The impact is stronger among firms with poorer governance, less external monitoring, and greater product market competition. The results based on supporting the causal impact of readability on firm risk are robust. Our findings suggest that more readable 10-K reports facilitate investor monitoring, inducing firms to manage risk better.

中文翻译：

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公司信息和风险：10-K 报告可读性作用的证据

本研究使用 2010 年《简明写作法》作为 10-K 报告可读性的外生变化，以确定报告改进对公司风险的影响。我们发现，更好的可读性显着降低了美国公司在 2001 年至 2016 年期间经历可读性环境冲击的总体风险和特殊风险。对于治理较差、外部监管较少、产品市场竞争加剧的公司来说，这种影响更大。基于支持可读性对公司风险的因果影响的结果是稳健的。我们的研究结果表明，更具可读性的 10-K 报告有利于投资者监控，促使公司更好地管理风险。