Corporate disclosures do not have to be as brief as possible to be useful. A 2026 Cornell study found that more circuitous management discussion and analysis (MD&A) narratives were associated with later earnings upturns among some firms and with more investor downloads from the SEC’s EDGAR system. Those are correlations, not proof that a writing style causes a recovery or reliably predicts one.
What “circuitousness” means in a corporate disclosure
The term describes how a narrative moves among related ideas. In the measure used by the researchers, verbal circuitousness is the ratio of the path a text takes through its ideas to the shortest path that could cover them. Cornell’s account says the researchers represented text chunks with average word vectors and retained their order to measure how related information was distributed across the narrative.
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That makes circuitousness different from simply having a long document, using difficult language, or repeating the same words. A company might revisit revenue while discussing financing, customer relationships and regulatory obligations, for example. The topic returns, but each appearance places it in another context.
How the study examined MD&A filings
According to the Cornell Chronicle’s October 6, 2026 report, the researchers analyzed more than 13,000 MD&A filings from annual reports submitted to the SEC between 1997 and 2019. They divided each MD&A into text chunks of approximately 250 words for computer modeling, then used natural language processing and machine learning to estimate circuitousness.
The team compared the measure with the Fog index, document length and repetition. Its analysis focused on firms with negative earnings, based on the researchers’ view that these companies might have more to gain from explaining their circumstances across multiple contexts. Cornell identifies the paper as “Circuitousness in Disclosure Narratives,” by Nicholas Guest and Jiawen Yan, published in The Accounting Review on August 17, 2026.
What the researchers found—and what it does not show
Cornell reports a positive association between greater circuitousness and firms that later experienced earnings upturns. It says the relationship did not appear for firms with impending downturns. The report also says higher MD&A circuitousness was associated with more EDGAR downloads.
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These results do not establish that circuitous writing caused better earnings or attracted downloads. Nor do they show that a circuitousness score by itself can reliably identify a turnaround. Cornell’s accessible report does not provide effect sizes, confidence intervals, a decision threshold or predictive-accuracy figures, so the strength and practical reliability of the relationships cannot be assessed from that account alone.
Why circuitousness is not the same as obfuscation
Nicholas Guest, an assistant professor of accounting at Cornell’s Samuel Curtis Johnson Graduate School of Management, distinguishes circuitousness from obfuscation: the latter makes a message hard to understand. Reintroducing a subject in relevant contexts could help a reader connect details that would be less informative in isolation. But revisiting a topic is not automatically helpful; it can also demand more attention, and length or repetition alone is not evidence of a useful explanation.
Guest cautions against treating brevity as an absolute goal: “CEOs shouldn’t necessarily try to be as brief as possible.” He says that discussing revenues in multiple contexts—such as financing, customer relationships and regulatory efforts—might be useful to investors with the time and sophistication to process that material.
How investors, analysts and journalists might use the idea
Guest suggests circuitousness could serve as a quick screen for investors interested in potential turnarounds, and that analysts or journalists might use it to spot subjects managers are struggling to explain. Those are proposed applications, not a validated screening strategy or investment recommendation. The reported correlations do not show that a score can forecast a company’s results, and they should not replace analysis of the underlying business and its filings.
For readers, the more practical lesson is to notice how a company develops an explanation: does it connect a central issue to meaningful parts of the business, or does it merely repeat language without clarifying the relationships? The study makes the organization of disclosure a potentially informative feature to examine, but it does not turn that feature into a verdict on a company.
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