Every listed company has to release an annual report at the end of the financial year. It’s often packed with promotional filler, so it can be tempting to skip the verbiage to focus on the figures. Don’t. Research suggests that careful reading can pay off. In particular, there are four “red flags” to watch out for.
Lack of clarity
If the chief executive or chairman’s letter that opens the accounts is vague or hard to understand, that’s a warning sign. Several studies suggest that firms whose reports score poorly for readability tend to [...]