The profits of companies with difficult-to-read annual reports are lower in following years, according to a study by a University of Michigan business professor.

"Managers may be opportunistically choosing the readability of annual reports to hide adverse information from investors," said assistant professor of accounting at the Stephen M. Ross School of Business, Feng Li, in a statement. "Firms with lower earnings not only tend to file annual reports that are more difficult to read, but a decrease in earnings from the previous year also results in annual reports that are harder to read, compared with the previous year's reports."

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