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Bailey McCann, Opalesque New York:

Hedge fund managers have always sold themselves as market wizards that can capitalize on information asymmetry in the market in order to make better trading decisions. A company's financial disclosure documents have often played a key role in those trading decisions. But in a recent blog post, New York University Stern School of Business Professor Baruch Lev points out that financial statements are becoming increasingly impossible to understand.

In the post, Lev highlights new research from the Journal of Accounting and Economics, which shows that over the past twenty years the readability of financial statements has gone down considerably, even as the use of text-based explanations for figures included in the statements has risen dramatically. Why? As compliance requirements for companies have expanded over the past two decades, lawyers and accountants are spending more time than ever before trying to explain estimates and other somewhat vague figures by using a mountain of hedged legalese.

"Amazingly, the median length of corporate 10-Ks more than doubled between 1996 and 2013. 200-300 page reports are now common, further damaging the ability to comprehend the message, if any, in these statements," Professor Lev writes of the findings.

The research comes alongsid......................

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