10-K complexity, analysts' forecasts, and price discovery in capital markets

This paper examines the behaviour of stock prices and analysts' earnings forecasts following firms' increasingly complex 10-K filings. Our evidence suggests that greater information uncertainty outweighs greater analyst ability, and the net effect drives greater underreaction in analysts' earnings forecasts following the release of more complex 10-Ks. Further analysis suggests that analyst underreaction mitigates market overreaction to the information in low-complexity 10-K filings, and overwhelms market overreaction to the information in high-complexity 10-K filings thus compromising price discovery of the earnings implications of more complex 10-Ks.