Annual Report Readability and Stock Liquidity

Sabri Boubaker, Dimitrios Gounopoulos, Hatem Rjiba

Research output: Contribution to journalArticlepeer-review

44 Citations (SciVal)


We examine the effect of annual report textual complexity on firms’ stock liquidity. Using techniques from computational linguistics, we predict and find that less readable filings are associated with lower stock liquidity. Our study provides evidence that difficult-to-read annual reports hinder investors’ ability to process and analyze information contained in corporate annual reports, reducing thereby their willingness to trade which decreases stock liquidity. Our findings are robust to a battery of sensitivity tests, including endogeneity, use of alternative estimation techniques, and use of alternative liquidity and readability proxies.
Original languageEnglish
Pages (from-to)159-186
Number of pages28
JournalFinancial Markets, Insitutions and Instruments
Issue number2
Early online date5 Mar 2019
Publication statusPublished - 1 May 2019


  • annual report readability
  • information asymmetry
  • stock liquidity
  • textual complexity

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance(all)


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