In this study, I examine variations in the textual complexity of annual report narrative disclosures using the Fog Readability Index and Fin-Neg word list Tone Index given year and industry effects. I analyze accounting narrative readability and tone based on firm years, associations between the two narrative measures, and industry data. Tests of the relationship between readability and tone show that negative narratives have higher readability scores, supporting the obfuscation hypothesis that bad news tends to be more difficult to read. A year analysis shows that the negative relationship between readability and tone increases in significance over time (2006–2011). An industry analysis shows that the observed obfuscation tends to persist in basic materials, consumer services, financial, technology, and utilities industries. This study shows that considering the effect of variations between industry and firm years can inform annual report textual complexity research and associated empirical analyses.

Data Availability: Data are available from the public sources cited in the text.

JEL Classifications: M41; M49.

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