The Plain English Paradox: Regulatory Reallocation of Linguistic Complexity in 10-K Filings

Plain-language initiatives are widely assumed to reduce disclosure complexity, yet they may reallocate complexity across linguistic forms rather than reduce it. Using 176,197 MD&A sections from 1997 to 2022, we distinguish between Dense complexity, which captures compressed technical wording, and Elaborate complexity, which captures layered sentence structure. We use 2010 as a timing event marking a shift in the SEC’s plain-language review environment and compare domestic 10-K filers with foreign 20-F filers in a dynamic difference-in-differences design. Following 2010, domestic filers exhibit a persistent increase in Elaborate complexity relative to 20-F controls, while Dense complexity shows no comparable treatment response. We interpret this pattern as a Plain English Paradox: plain-language pressure is associated with a persistent increase in syntactic elaboration, while Dense complexity shows no comparable post-2010 treatment response. The findings suggest that standard readability measures may miss important compositional shifts in how firms write financial disclosures.